Stocks jumped Monday morning with the three major indices wanting to start May on a high note.
The S&P 500 added approx. 0.6%. On Friday, the index ended lower, but still closed its best month since November with a monthly advance of more than 5%. In April, the communications services and consumer discretionary sectors led gains in the S&P 500 and returned to a leading position after delaying earlier in 2021 amid a rotation to cyclical and “reopening” stocks. Growth names, however, paired some gains last week, with Federal Reserve Chairman Jerome Powell highlighting that some asset valuations seemed “frothy”
Still, a surge of stronger-than-expected earnings results from companies across industries helped keep the recent move higher in the broader market, as corporate profits rose again along with the rise in economic activity. As of Friday, 86% of S&P 500 companies had beaten earnings expectations in the first quarter, according to FactSet data. This would mark the highest share since at least 2008 if it lasts through the end of the first-quarter earnings season. Companies including Uber (UBER), Lift (LIFT), Square (SQ), Peloton (PTON) and Pfizer (PFE) are ready to report results later this week.
Support for the economic recovery has been the strong pace of vaccinations in the United States, which in turn has enabled more businesses across the country to reopen and strengthened consumer confidence to return to a estimate of normalcy. As of Sunday, more than 104 million Americans were fully vaccinated, according to data from the Centers for Disease Control and Prevention, to make up nearly a third of the country’s total population.
However, some strategists warned investors to become complacent, with the good good news of the recovery now well priced in the markets.
“I think the market is almost priced to perfection, right? We have priced a good vaccine rollout. We have priced in a strong reopening of the economy. I’m a little worried about the second half of the year,” Allan Boomer, Momentum Advisors Chief Investment Officer, told Yahoo Finance. “I think it’s possible that earnings in the short term have basically peaked, and … this is a good quarter, but I do not know that the rest of the year will be as strong.”
“One of the things that I think you’ll start to see is that we have a shortage of labor in the United States. We’re talking about the jobs that were lost. We’m not really talking about there being much. of companies that have a lot of vacancies that are outstanding, “he added.” So I think you will start to see in the second half especially companies that are dependent on labor and you will definitely start to see some problems of labor shortages. “
The Ministry of Labor releases its April job report on Friday, which is expected to show that nearly 1 million wages came back last month, accelerating from March gains.
9:31 AM: Stock opens higher
Here’s where markets open Monday morning:
S&P 500 (^ GSPC): +23.16 points (+ 0.55%) to 4,204.33
Dow (^ DJI): +199.09 points (+ 0.59%) to 34,073.94
Nasdaq (^ IXIC): +64 points (+ 0.46%) to 14,028.74
Raw (CL = F): + $ 0.24 (+ 0.38%) to $ 63.82 pr. Barrel
Gold (GC = F): + $ 20.90 (+ 1.18%) to $ 1,788.60 pr. Ounce
10-year treasury (^ TNX): -1 bp to achieve 1.621%
9:27 AM ET: Verizon sells media business including Yahoo Finance to Apollo in $ 5 billion deal
Telecommunications giant Verizon (VZ) said Monday it agreed to sell its media business segment, including Yahoo and AOL, to private equity firm Apollo Global Management. Verizon is currently the parent company of Yahoo Finance.
The agreement of 5 billion. Dollar is expected to close in the second half of the year and will rename the company, currently known as Verizon Media, to Yahoo. Other brands in the portfolio include TechCrunch, Makers, Ryot and Flurry. Verizon’s media group reported revenue of $ 1.9 billion in the first three months of 2021, an increase of 10% over the previous year.
8:00 ET: ‘Capex, R&D and M&A account for a majority of companies’ cash costs in 2021′: Goldman Sachs
With uncertainty from the pandemic promise, companies have begun announcing ambitious new strategies, many of which involve massive investments in their future growth. According to Goldman Sachs US chief marketing strategist David Kostin, these expenses will primarily be drawn into one of three key areas.
“Capex, R&D and M&A will account for the majority of companies’ cash costs,” Kostin wrote in a note on Monday morning. Many companies have used the 1Q reporting season to announce significant new growth initiatives. US spending plans from AAPL ($ 430 billion over 5 years) and capex boost with INTC ($ 20 billion) and WMT ($ 14 billion) are notable examples.
“We anticipate a + 19% rebound in cash use in 2021 and + 6% growth in 2022,” he added. “Tax represents an island risk to the track with cash spending in 2022 and beyond.”
07:27 A MONDAY: Stock futures point to a higher opening
Here the markets traded before the opening clock on Monday morning:
S&P 500 futures (ES = F): 4,194.75, up 20.25 points or 0.49%
Dow futures (YM = F): 33,967.00, up 200 points or 0.59%
Nasdaq futures (NQ = F): 13,884.00, up by 34.25 points or 0.25%
Raw (CL = F): + $ 0.08 (+ 0.13%) to $ 63.66 a barrel
Gold (GC = F): + $ 10.80 (+ 0.61%) to $ 1,778.50 per. Ounce
10-year treasury (^ TNX): +1.3 bps to give 1.644%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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