Weekly Snapshot May 7th, 2021
Market Review: Week Ending 5/7/2021
Major equity markets were generally higher for the week, with the Dow Jones Industrial Average (DJIA) and S&P500 Index (S&P500) setting new record closes while the NASDAQ Composite (NASDAQ) faltered. The DJIA advanced +2.67% for the week, the S&P500 gained +1.23%, the Russell 2000 Index (R2000) increased +0.23%, and NASDAQ fell -1.51%.1 NASDAQ recorded its worst weekly loss in two months.2 Value stocks continued their strong performance with the Russell 1000 Value Index returning +2.79% versus the negative -1.01% return of the Russell 1000 Growth Index.3 Within S&P 500 sectors, outperformers for the week were Energy +8.89%, Basic Materials +5.86%, and Financials +4.21%, while sector underperformers were Consumer Discretionary -1.17%, Utilities -1.12%, and REITs -0.50%.4
Dominating the week was disappointing U.S. economic news led by Nonfarm payrolls, ISM Manufacturing and Services PMIs. These negative surprises have investors questioning the pace of U.S. economic growth. April Nonfarm payrolls were 266,000 versus expectations of approximately a 1.0 million gain, while March payrolls were adjusted downward by 150,000 to 770,000.5 As the economy reopens, job gains continued in the hospitality/leisure sectors with slowdowns in the manufacturing, construction, and mining sectors. The unemployment rate increased to 6.1% from March’s 6.0% rate, versus forecasts calling for a decline to 5.8%.6
Disappointments were also seen in the Institute for Supply Management indexes for manufacturing and non-manufacturing. Although elevated at 60.7, the ISM manufacturing index for April fell below both expectations and the previous month. The ISM non-manufacturing index also confirmed April’s slowdown falling below estimates.7
With 88% of the S&P500 companies reporting, the index’s year-over-year growth in earnings is the highest since the 1st Quarter of 2010. Stronger reported earnings and easier 2020 comparisons are driving actual earnings above estimates by 22%.8
WHAT WE WILL BE WATCHING THIS WEEK
Various economic reports on the health and direction of the economy:
- U.S. Bureau of Labor Statistics – Consumer Price Index.
- U.S. Department of Labor -Weekly Unemployment Claims.
- U.S. Census Bureau – Retail Sales.
- University of Michigan Index of Consumer Sentiment.
STOCKS IN THE NEWS
- Monster Beverage (MNST) reported results better than expected for the quarter; however, the stock fell 4% as management disclosed supply difficulties and the scramble to secure aluminum cans. Given the pandemic led shift from restaurants to home consumption, demand for aluminum cans rose. This sharp increase in demand caused supply shortages that are not expected to ease until year end.9
As always, we appreciate your confidence in our team.
Fundamentum Investment Committee
John Nichol, CFA® – Chief Investment Officer
Trevor Forbes – Investment Committee
Robert Armagno – Investment Committee
Christopher A. Silipigno, ChFC® – Investment Committee
Christopher G. King – Investment Committee
Timothy J. Shumsky – Investment Committee
Sources:
1 FactSet – 5/7/2021
2 T. Rowe Price – 5/7/2021
3 JPMorgan Asset Management – 5/7/2021
4 FactSet – 5/7/2021
5 Charles Schwab – 5/7/2021
6 Charles Schwab – 5/7/2021
7 John Hancock – 5/7/2021
8 FactSet – 5/7/2021
9 FactSet – 5/6/2021
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Investment advice offered through Fundamentum LLC a registered investment advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the investment objective of any investment strategy will be attained. Investing involves risk including loss of principal. Past performance is no guarantee of future performance. All indices are unmanaged and may not be invested into directly.
