Stocks traded mixed on Monday, with the S&P 500 and Dow looking to kick off May on a high note while the Nasdaq declined.
The S&P 500 added about 0.4%, while the Dow jumped by 0.9%. On Friday, the S&P 500 ended ended lower, but still closed out its best month since November with a monthly advance of more than 5%. In April, the communication services and consumer discretionary sectors led gains in the S&P 500, returning to a leadership position after lagging earlier in 2021 amid a rotation into cyclical and “reopening” stocks. However, growth names pared some gains last week, with Federal Reserve Chair Jerome Powell highlighting that some asset valuations appeared “frothy.”
Still, a wave of stronger-than-expected earnings results from companies across industries helped fuel the latest move higher in the broader market, with corporate profits rebounding alongside the pick-up in economic activity. As of Friday, 86% of S&P 500 companies had beaten first-quarter earnings expectations, according to FactSet data. This would mark the highest proportion since at least 2008, if it holds through the end of first-quarter earnings season. Companies including Uber (UBER), Lyft (LYFT), Square (SQ), Peloton (PTON) and Pfizer (PFE) are poised to report results later this week.
Underpinning the economic recovery has been the strong pace of vaccinations in the U.S., which has in turn enabled more business across the country to reopen and bolstered consumers’ confidence in a return to a semblance 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 comprise nearly one-third of the country’s total population.
However, some strategists cautioned investors about getting complacent, with the ample good news on the recovery now well priced into the markets.
“I think the market is priced almost to perfection, right? We’ve priced in a good vaccine rollout. We’ve priced in a strong reopening to the economy. I’m a little concerned about the second half of the year,” Allan Boomer, Momentum Advisors Chief Investment Officer, told Yahoo Finance. “I think it’s possible that in the short term, earnings have basically peaked and … this is a great quarter, but I don’t know that the rest of the year will be quite as strong.”
“One of the things that I think you’ll start to see is that we’ve got a labor shortage in the United States. We talk about the jobs that were lost. We don’t really talk about the fact that there’s a lot of companies that have a lot of vacancies that are outstanding,” he added. “So I think you’ll start to see in the second half particularly companies that rely on labor, you’ll start to see some issues around a labor shortage for sure.”
The Labor Department will release its April jobs report on Friday, which is expected to show a staggering nearly 1 million payrolls came back last month, accelerating from March’s gain.
12:05 p.m. ET: Stocks trade mixed, Nasdaq dips
Stocks traded mixed Monday afternoon, with the S&P 500 and Dow gaining while the Nasdaq fell.
The S&P 500’s gains were led by the energy, materials and health-care sectors. Technology stocks lagged, extending last week’s stretch of weakness. The Nasdaq turned negative during the afternoon session.
The Dow outperformed, gaining more than 300 points, or 0.9%, at session highs. Materials company Dow Inc (DOW) and Home Depot (HD) led the advances, followed by Walgreens Boots Alliance (WBA) and IBM (IBM).
11:03 a.m. ET: Construction spending increased far less than expected in March
Construction spending increased at a pace that came in far below expectations in March, with non-residential structures and public spending still taking place at a weak rate amid the pandemic.
Construction spending increased 0.2% in March over February, the Commerce Department said Monday. This came following a 0.6% drop in spending in February, which was largely due to inclement weather. Consensus economists were looking for a rise of 1.6% in construction spending during the month. Still, spending was up 5.3% year-over-year, with strength in housing construction still helping buoy the metric overall.
10:56 a.m. ET: U.S. manufacturing sector activity cooled slightly in April as soaring demand pushed prices higher: IHS Markit
IHS Markit’s final U.S. manufacturing purchasing managers’ index for April pulled back slightly at the end of the month, with rising costs and supply chain delays weighing on the sector.
The IHS Markit manufacturing purchasing managers’ index closed out the month at 60.5, or below the 60.6 reported in the preliminary print and the 60.7 expected from consensus economists, according to Bloomberg data. Still, the index was strongly in expansionary territory, or well over the neutral level of 50.0.
“US manufacturers reported the biggest boom in at least 14 years during April,” Chris Williamson, chief business economist at IHS Markit, said in a press statement. “Demand surged at a pace not seen for 11 years amid growing recovery hopes and fresh stimulus measures.”
“Supply chain delays worsened, however, running at the highest yet recorded by the survey, choking production at many companies,” he added. “Suppliers have been able to command higher prices due to the strength of demand for inputs, pushing material costs higher at a rate not seen since 2008.”
9:31 a.m. ET: Stocks open 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
Crude (CL=F): +$0.24 (+0.38%) to $63.82 a barrel
Gold (GC=F): +$20.90 (+1.18%) to $1,788.60 per ounce
10-year Treasury (^TNX): -1 bp to yield 1.621%
9:27 a.m. ET: Verizon to sell 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 $5 billion deal is expected to close in the second half of the year, and will rename the business currently known as Verizon Media as 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, for a 10% year-over-year increase.
8:00 a.m. ET: ‘Capex, R&D and M&A will account for a majority of corporate cash spending in 2021’: Goldman Sachs
With uncertainty from the pandemic lifting, corporations have begun to announce ambitious new strategies, many of which involve massive investments into their future growth. According to Goldman Sachs U.S. chief market strategist David Kostin, this spending will be primarily funneled into one of three key areas.
“Capex, R&D and M&A will account for a majority of corporate cash spend,” Kostin wrote in a note Monday morning. “Many firms have used 1Q reporting season to announce substantial new growth initiatives. U.S. spending plans by AAPL ($430 billion over 5 years), and capex boosts by INTC ($20 billion) and WMT ($14 billion) are notable examples.”
“We forecast a +19% rebound in cash use in 2021 and +6% growth in 2022,” he added. “Tax represents a ey risk to the trajectory of cash spending in 2022 and beyond.”
7:27 a.m. ET Monday: Stock futures point to a higher open
Here’s where markets were trading before the opening bell 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 34.25 points or 0.25%
Crude (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 yield 1.644%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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