Weekly Update – April 19, 2021
The Week on Wall Street
Stocks reached record highs last week, riding the tailwind of improving economic data and a strong start to the earnings season.
The Dow Jones Industrial Average rose 1.18%, while the Standard & Poor’s 500 gained 1.37%. The Nasdaq Composite index added 1.09%. The MSCI EAFE index, which tracks developed overseas stock markets, climbed 1.00%.1,2,3
Earnings, Economic Data
Stocks rallied early in the week on strong retail sales, a sharp drop in initial jobless claims, and a retreat in bond yields. Stocks then climbed to fresh record highs on Thursday, with the Dow Jones Industrial Average rising above 34,000 for the first time and the S&P 500 approaching
4,200.4
The market overcame some initial jitters arising from health authorities recommending a pause on a COVID-19 vaccine. Stocks also looked past an increase in the Consumer Price Index and a Federal Reserve report that indicated businesses were raising prices.
A surge in housing starts helped the rally, with stock prices moving higher to close out the week.
The Economic Pulse
Last week provided insight into the economic recovery, and the numbers vindicated the optimism that has driven markets higher.
An acceleration in inflation was expected, but came in at a rate (+2.6%) that didn’t appear to rattle the markets. It was, however, retail sales (an increase of 9.8%), new jobless claims (576,000–the lowest level since March 14, 2020), continuing unemployment claims (the lowest four-week moving average since March 28, 2020), and housing starts (+19.4%) that emboldened investors.5,6,7,8,9
Confirmation of this recovery came with the start of the new earnings season, which kicked off with strong earnings that, in some cases, exceeded Wall Street consensus expectations.
THIS WEEK: KEY ECONOMIC DATA
Thursday: Jobless Claims. Existing Home Sales. Index of Leading
Economic Indicators.
Friday: New Home Sales. Purchasing Managers Index (PMI) Composite
Flash.
THIS WEEK: COMPANIES REPORTING EARNINGS
Monday: International Business Machines (IBM), Coca-Cola (KO).
Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), Lockheed
Martin (LMT), United Airlines (UAL), Procter & Gamble (PG), Abbott
Laboratories (ABT), CSX Corporation (CSX).
Wednesday: Verizon Communications (VZ), Lam Research (LRCX),
Anthem, Inc. (ANTM), Chipotle Mexican Grill, Inc. (CMG), Crown Castle
International (CCI).
Thursday: AT&T (T), Intel Corporation (INTC), Snap (SNAP), Blackstone
Group (BX), American Airlines (AAL), Southwest Airlines (LUV), Union
Pacific (UNP), D.R. Horton, inc. (DHI), Credit Suisse Group (CS), Dow,
Inc. (DOW).
Friday: American Express (AXP), KimberlyClark Corporation (KMB).
_________
1. The Wall Street Journal, April 16, 2021
2. The Wall Street Journal, April 16, 2021
3. The Wall Street Journal, April 16, 2021
4. The Wall Street Journal, April 13, 2021
5. CNBC, April 15, 2021
6. The Wall Street Journal, April 15, 2021
7. Department of Labor News Release, April 15, 2021
8. Department of Labor News Release, April 15, 2021
9. Reuters, April 16, 2021