Quick take: No Bias. Too much uncertainty.
Fear of missing out was the rally cry for many Bulls heading into Friday’s unemployment numbers. But apparently few were able to grasp the unexpected addition of 2.5 million jobs last month, which turbo charged shares even higher with the believe that a V-shaped recovery has been nailed in.
For the week, the S&P 500 shot up +4.91% and the Nasdaq +3.42%. The buying was large and heavy with all sectors participating.
The unexpected data miss from the “experts” has raised eyebrows. Perhaps the unfamiliar ground of shutting down the economy coupled with stimulus programs like the Payroll Protection Program has distorted economists visions. Perhaps the government’s history of errors in data plays a roll.
What is clear is that the economy is mostly open now. What is unclear is how the economy will look when the stimulus runs out. The unemployment rate stands at 13% at them moment, down from 15% before Friday’s announcement.
Stocks do not offer an attractive risk-reward scenario. Difficult to bet the market will continue to charge higher given valuations and the uncertainty of the economy – as well as the coronavirus.
The Dow, +6.81%, has been a big upside driver for the market as the hunt for yield continues. Dividends pay higher than treasuries. It’s hard to retire.
Mixed signals with fund flows.:
While discount brokers have reported large inflows, many wealth advisors and fund managers haver reported outflows from stocks and into the safety of bonds.
Large numbers of block trades Friday may suggest real buying. Funds available from quantitive easing will weigh in as will short covering.
For a change, the market is being led by non-tech names. Tech remains firm, with the FAANG and Microsoft stocks showing strength. But it’s the breadth of the rest of the market that has really stepped in of late.
We may see some bad earnings reports in the second quarter, though the prospects are better for the second half of the year – IF the coronavirus does’t become a problem again.
This pandemic market has created winners and losers depending on how well a companies model has allowed them to adjust to quarantines.
There is always something to be afraid of.
Commercial Real Estate is threatened with with nearly half the rents not paid in May. Starbucks, TJ Max and Ross Store are among those who reportedly did not pay.
Wells Fargo (WFC, +19.64%) pulling back on auto and home equity loans is a concern for the credit market. Rental car company Hertz declaring bankruptcy is also worth taking note of for signs of a trend, or perhaps opening the door for other companies to succeed.
- The S&P 500 is trending higher above major moving averages, and is abut 6% away from its February high.
- NYSE about 25% higher than last week and the Nasdaq 40% higher.
- NYSE buy-volume dominating sell-volume by more than 4 to 1, Nasdaq more than 2 to 1.
- All sectors advanced, with Industrials (XLI, +7.12%), Consumer Discretionary (XLY, +7.06%) and Energy (XLE, 6.08%) the biggest winners.
Loads of high quality setups. We can see the 5G stocks making bases now, though they’re not qualifying with underlying fundamentals.
|Autodesk Inc||ADSK||Software & IT Services|
|A. O. Smith Corp||AOS||Machinery, Equipment & Components|
|TopBuild Corp||BLD||Construction & Engineering|
|Biomarin Pharmaceutical Inc||BMRN||Pharmaceuticals|
|Deckers Outdoor Corp||DECK||Textiles & Apparel|
|Danaher Corp||DHR||Healthcare Equipment & Supplies|
|Epam Systems Inc||EPAM||Software & IT Services|
|GoDaddy Inc||GDDY||Software & IT Services|
|Acushnet Holdings Corp||GOLF||Leisure Products|
|Howmet Aerospace Inc||HWM||Metals & Mining|
|Horizon Therapeutics PLC||HZNP||Pharmaceuticals|
|Lowe’s Companies Inc||LOW||Specialty Retailers|
|Livongo Health Inc||LVGO||Healthcare Equipment & Supplies|
|Paycom Software Inc||PAYC||Software & IT Services|
|Pool Corp||POOL||Leisure Products|
|Thor Industries Inc||THO||Leisure Products|
|Trade Desk Inc||TTD||Software & IT Services|
|UnitedHealth Group Inc||UNH||Healthcare Providers & Services|
|Slack Technologies Inc||WORK||Software & IT Services|
|Williams-Sonoma Inc||WSM||Specialty Retailers|
|American Airlines Group Inc||AAL||Passenger Transportation Services|
|Avantor Inc||AVTR||Healthcare Equipment & Supplies|
|Brunswick Corp||BC||Leisure Products|
|BWX Technologies Inc||BWXT||Aerospace & Defense|
|Beyond Meat Inc||BYND||Food & Tobacco|
|Charter Communications Inc||CHTR||Media & Publishing|
|D.R. Horton Inc||DHI||Homebuilding & Construction Supplies|
|DaVita Inc||DVA||Healthcare Providers & Services|
|Floor & Decor Holdings Inc||FND||Specialty Retailers|
|Hologic Inc||HOLX||Healthcare Equipment & Supplies|
|J B Hunt Transport Services Inc||JBHT||Freight & Logistics Services|
|Manhattan Associates Inc||MANH||Software & IT Services|
|Microsoft Corp||MSFT||Software & IT Services|
|Cloudflare Inc||NET||Software & IT Services|
|ServiceNow Inc||NOW||Software & IT Services|
|Peloton Interactive Inc||PTON||Leisure Products|
|SiteOne Landscape Supply Inc||SITE||Food & Tobacco|
|Stericycle Inc||SRCL||Professional & Commercial Services|
|Atlassian Corporation PLC||TEAM||Software & IT Services|
|10X Genomics Inc||TXG||Healthcare Equipment & Supplies|
|Ubiquiti Inc||UI||Communications & Networking|
|VMware Inc||VMW||Software & IT Services|
The stock market has not reacted to the protests and riots across the country. That shouldn’t be a sign of uncaring, only that it doesn’t appear to be taking away from business. Many companies have stepped up and donated for the sake of ending racism.
Society will ultimately be better for all of this. As Martin Luther King said, “riots are the language of the unheard.” Hopefully a lot of listening will take place as response.
There will come a day where people are only seen by their good actions and bad actions. Skin color and culture will be irrelevant in the true judgment of a person.