Monday was the session that never really got out of the gate. Instead, stocks meandered without any clear leadership or conviction. The good news is sellers didn’t have conviction either; the bad news is ‘would-be’ buyers had even less. There is a lot of stuff happening this week, so it was understandable investors kept their powder dry.
Early in the session, Energy (XLE) was the top-performing sector, as crude oil prices edged higher on geological headlines. However, the XLE sector would soon turn lower and finished the session as the worst performer. Technology (XLK) couldn’t get it in gear either, as chips were bifurcated with some moving higher, but others stumbling on continued worries over supply chain issues.
Real Estate (XLRE) was intriguing. The sector was paced by names associated with 5G buildout and storage. The 5G development is something we’ll watch closely. After losing a lot of their oomph, Crown Castle (CCI) and American Tower (AMT) have made stealthy gains.
S&P 500 Index | -0.02% | |
Communication Services XLC | -0.40% | |
Consumer Discretionary XLY | +0.64% | |
Consumer Staples XLP | +0.54% | |
Energy XLE | -0.79% | |
Financials XLF | +0.43% | |
Health Care XLV | +0.10% | |
Industrials XLI | +0.37% | |
Materials XLB | +0.35% | |
Real Estate XLRE | +0.59% | |
Technology XLK | -0.48% | |
Utilities XLU | +0.09% |
Market Breadth
It was a lackluster session, no matter how you look at it. While advancers matched decliners on the New York Stock Exchange, the thin-up volume spoke to anxiety that just keeps holding investors back.
Market Breadth | NYSE | NASDAQ |
Advancing | 1,640 | 1,468 |
Declining | 1,644 | 2,711 |
52 Week High | 305 | 179 |
52 Week Low | 17 | 73 |
Up Volume | 1.47B | 1.15B |
Down Volume | 2.20B | 3.13B |
Chips Ahoy
There was a lot of news in the semiconductor space yesterday. The evolution of Nvidia (NVDA), which unveiled its first server microprocessor, is taking direct aim at Intel (INTC) and Advanced Micro (AMD). The news propelled NVDA to the top mover in the S&P 500 – it hit its (new) rivals like a punch to the gut.
NVDA already has orders for the chips from The Swiss National Supercomputing Centre and the U.S. Department of Energy’s Los Alamos National Laboratory. Over the past five years, NVDA shares +1,538% versus +108% for INTC.
To see the chart, click here.
Consumer Expectations
In a survey from the New York Fed, consumers expect higher inflation and household spending over the next year.
Consumer One Year Expectations | Mar 2021 | Feb 2020 |
Higher Stock price | 41.2% | 42.4% |
Finding Job (in three months if lost) | 48.7% | 58.7% |
Inflation | 3.2% | 2.5% |
Household Income | 2.8% | 2.7% |
Household spending | 4.7% | 3.1% |
Confident Millennials
Those surveyed under the age of 40 are the largest percentage that see the stock market higher in one year, and believe if they lost their jobs right now, they could find a new one in three months.
Stock Market Higher One Year from Now
Age | Mean | Income | Mean | Education | Mean |
<40 | 44.6% | <$50K | 35.7% | HS | 35.9% |
40 to 59 | 38.0% | $50K to $100K | 43.2% | Some College | 39.7% |
>59 | 41.9% | $100K+ | 44.9% | BA | 47.4% |
Find a Job in Three Months if Lost Now
Age | Mean | Income | Mean | Education | Mean |
<40 | 53.8% | <$50K | 44.5% | HS | 37.1% |
40 to 59 | 48.3% | $50K to $100K | 50.3% | Some College | 51.1% |
>59 | 36.3% | $100K+ | 50.4% | BA | 54.5% |
Portfolio Approach
We added to Consumer Discretionary yesterday in our Hotline Model Portfolio.
Today’s Session
Consumer Price Index
Consumer prices climbed 2.6% from a year earlier in March and +0.6% from February. Wall Street consensus was +2.5% y/y. Taking out food and energy, core inflation rose 0.3% consensus was +0.2%. I think whisper numbers were a lot higher than consensus; hence, the muted response.
Highlights | Month change | Year change |
Living room furniture | +2.4% | +4.0% |
Men’s pants | +2.6% | +4.2% |
Jewelry | +5.7% | +7.4% |
New cars | +0.0% | +1.5% |
Used cars | +0.5% | +9.4% |
Car & Truck rentals | +11.7% | +31.2% |
Alcohol | +0.2% | +2.6% |
Delivery service | +1.0% | +4.6% |
Checking accounts | +13.0% | +0.1% |
Musical instruments | +3.7% | +0.9% |
CPI
To see the chart, click here.
The CDC suggest a pause on the Johnson & Johnson vaccine after six patients in 6.7 million got blood clots. The agency says the move is “out of an abundance of caution,” and there will be a press conference later this morning.
For the stock market, this makes it more likely the Fed will be able to hold off on raising rates, as more people will wait for the jab. Yesterday, St Louis Fed President James Bullard suggested 75% vaccination was the magic number that would start the Fed to begin unwinding accommodation.
Even before this morning’s developments, getting to 75% anytime soon was a long shot.
To see the chart, click here.
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