Time for Traditional Values: The Market Focuses on Results of Industry Heavyweights

This year, market participants are likely to pay more attention to quarterly reports and figures from industry heavyweights’ companies. The 2020 favorites, the stocks of technology companies that benefited from the COVID-19 epidemic, look overvalued. Their place is confidently taken by the growing income package of industry heavyweights of the economy.

NASDAQ Stock Exchange posted first decline

The U.S. stock index NASDAQ 100, which includes the 100 largest technology companies (inclusive of Tesla Inc. and Alphabet Inc.) and is listed on the NASDAQ Stock Exchange in New York, posted its first decline in three sessions. There are several reasons why Tesla entered a bear market. The first is the Federal Reserve and its policies. The second reason is the increased activity of Chinese companies and Volkswagen. Tesla has always been a leader in the industry, but as competition intensified on the market, some investors chose to get rid of the company’s shares. The reason why Alphabet stock also went down is its specialization in technology. Investors who kept their attention on the tech sector during the pandemic have now changed their priorities.

The S&P 500 index closed without much change after fluctuating between up and down during the day. The probability of growth resumption and renewal of maximums on the short-term horizon can be estimated as restrained. The prospect of economic recovery and a soft Fed policy could support background optimism on the market.

United Parcel Service, the world’s largest express delivery service, reports a net income increase in the first quarter to $4.792 billion, or $5.47 per share. The financial results exceeded expectations, which caused the stock price to rise to a record high.

Tesla quotes were down 3%

Despite the growth of profits and revenues, Tesla’s quotes fell slightly after the release of the first quarter of 2021. Elon Musk had nothing to surprise investors with, and no new ambitious annual sales target was set. After the report was released, Tesla quotes were down 3%.

The market value of 3M Co. decreased by 2.6%. The U.S. company, which produces more than 50,000 different products, in the 1st quarter received better financial results than expected. It seems strange that the stock price is declining despite significantly exceeding forecasts, but 3M outperformed the street estimates by only 20%.

According to The Wall Street Journal, Google’s parent company, Alphabet, reported record sales for the first quarter of 2021. They totaled $55.31 billion. The results for the quarter were 34% higher than in the previous year, due to the coronavirus pandemic.

A short while ago, Microsoft reported Q3 sales that matched analysts’ expectations, while earnings beat forecasts. However, shares were down slightly, reflecting some skepticism about one-time factors affecting the results and high hopes after a year-long rally.

Reports from Apple Inc. and Amazon.com Inc. for the second quarter of the fiscal year 2021 are awaited shortly. For the first quarter of the fiscal year 2021, Apple Inc. reported more than $111 billion in revenue. That’s a 21 percent increase over last year. In the last quarter of 2020, Amazon’s sales rose to $125.6 billion, or up 44% from last year’s result.

Investors are probably interested in how quickly the world’s economy will recover from its worst fall in more than 70 years, at what pace it will proceed, and which regions will be primarily affected.

Investors continue to follow companies’ financial reports. Released first-quarter results of four out of five S&P 500 tech giants have exceeded analysts’ expectations. According to Bloomberg, the average change in the share rose less than 0.1 percent after the publication of corporate reports.

According to Greg Bassuk, chief executive officer at AXS Investments, Earnings optimism in 2021 was predictable, so investors are more interested in far superior expectations that will spur stock price gains. 

Annualized growth in U.S. GDP is expected to get 6.8 percent in the first quarter of 2021.

Americans became more optimistic about current business and labor market conditions amid a decline in Covid-19 infections, data from The Conference Board showed Tuesday.

U.S. Federal Reserve is expected to leave its federal funds rate unchanged

U.S. Federal Reserve is expected to leave its federal funds rate unchanged at 0-0.25%. The last time the rate was changed was March last year.

According to Lauren Goodwin, economist and portfolio strategist at New York Life Investments, Strong economic expectations echoed in the data provided after the last Fed meeting and resulted in impressive earning reports in general, not just on the economic side.

The STOXX Europe 600 or STOXX 600 is a stock index of the 600 largest European companies.

It has declined as investors weighed up the possibilities for further growth. And one of the largest financial conglomerates in the world, HSBC Holdings plc., published information about doubled quarterly profit growth and returning to profits in Europe and the U.S as well as laying firm foundations for future growth.

Popular commodities benchmark, The Bloomberg Commodities Index (BCOM), which tracks 23 exchange-traded contracts (derivatives) for physical commodities and assets valued at about $85 billion, is up for a seventh day as well. Copper price continues to rise amid the Biden administration’s plans for a major infrastructure package. Over the past couple of months, the price of copper has risen significantly, and many analyst agencies have begun to forecast the start of a new commodities supercycle.

Oil rises as well after OPEC+ prediction about a strong recovery from reduced demand for oil, despite near-term demand destruction following India’s covid-19 infection records in April this year.

Time for Traditional Values

Here are some key events to follow this week:

  • Chair of the Federal Reserve Jerome Powell to hold a press conference Wednesday after the Fed’s meeting

  • President Biden addresses to a Joint Session of Congress on Wednesday

  • Fiscal stimulus from the federal government should power U.S. GDP growth in the first quarter

  • For real-time updates and commentary on the markets, follow the MLIV blog

 

Here are some of the major changes on the markets:

Stocks

The S&P 500 showed little fluctuations at 4:01 p.m. New York time

The Nasdaq 100 has dropped 0.4%

The Dow Jones Industrial Average changed insignificantly

The MSCI Emerging Markets Index tracks some little changes

 

Currencies

The Bloomberg Dollar Spot Index showed a rise of 0.2%

EUR/USD Exchange Rate: $1.2089

The Pound sterling also gained against the U.S. dollar at $1.3906

The Japanese yen fell against the U.S. dollar, down 0.6% at $108.74

 

Bonds

The 10-year Treasury bond yield gained six basis points to 1.62%

German 10-year bond yields showed a small change at -0.25%

UK 10-year bond yield moved up two basis points to 0.77%

 

Commodities

West Texas Intermediate crude oil showed a rise of 2.1% to $63 a barrel

Gold futures keep rates around zero to 0.3% with $1,776 per ounce

 

With the help of Andreea Papuc, Haslinda Amin, Emily Barrett, and Claire Ballentine

This site uses cookies to offer you a better browsing experience. By browsing this website, you agree to our use of cookies.