Our Market Update for the 1st Half of May 2021

For our article, we will discuss our Market Update for the 1st Half of May 2021 with the latest issue of our biweekly Market Movers Newsletter! May has been busy – the markets dominated by ups and downs – with heavy investor concern over inflation and crashes/delays in certain market sectors. As always, FFR encourages investors to think critically – looking at the market for patterns and paying attention to what influences your investments. If  you are looking for an effective way to stay on top of the trading climate and manage your investments effectively, be sure to visit our strategy pages for forex, options, index futures, or commodities pages to learn more.  You can always speak with a member of our client care team by giving us a call at (800) 883-0524 or contacting us via email or our contact form. If you would like to sign up for notifications for our biweekly Market Movers Newsletter, send us an email at [email protected] or come back to visit our blog every two weeks! Now, let’s discuss what moved the markets with our Market Update for the 1st Half of May 2021!

Monday – May 3

  • The broader market advanced today with the S&P and the Dow closing just below a new high.
  • Many retail stocks are reaching new highs, yet stay-at-home companies are also benefiting as consumers continue to purchase goods for home improvement and home office functions.
  • Business appears to be moving steadily along as the PMI jumped to 60.5 just as economists had expected.
  • But in contrast, the ISM Manufacturing Index didn’t provide as optimistic an outlook, coming in at 60.7, well below analysts’ consensus of 65.0; the market declined upon hearing this data.
  • March construction spending slowed month over month to 0.2%, a tenth of the 2.0% that economists were looking for.

Tuesday – May 4

  • Stocks went for a rocky ride today–the Dow sunk 347 points but ended the day barely in the green; the real underperformer was the Nasdaq, down 2% as big tech had a tough day.
  • Investors were a bit spooked when former Fed chair and current Treasury Secretary Janet Yellen said that interest rates may have to be raised modestly to prevent the economy from overheating.
  • Despite inflation fears, the yield on the 10-year Treasury actually dropped below 1.6%.
  • The idea of “peak valuation” in the market, however, remains a concern.
  • April’s vehicle sales roared stronger than expected at 18.5 million, 1M more than what was expected and despite shortages and higher prices (among both new and used cars).
  • International trade in March saw our trade deficit sink further to the tune of $-74.4 billion; analysts were expecting only -$74 billion.
  • Factory orders in March rose 1.1% month over month, not as hot as the 1.3% economists were looking for but certainly better than last month’s revised figure of -0.5%.

Wednesday – May 5

  • It was a mixed day on Wall Street as the Dow and S&P 500 finished the day higher while the Nasdaq closed lower.
  • The key story, however, is that tech mega-caps have more or less stabilized amid fears that tech may be resetting itself lower.
  • The April ADP Employment report saw a strong rise to 742,000 jobs from the previous month’s 565,000. Still under the 785,000 consensus. The country is still short of 9.71 million jobs, so there’s lots of ground still to be covered.
  • The April ISM services index came in at 62.7, below the 64.2 consensus.

Thursday – May 6

  • The broader market saw another rally into the close with the Dow managing to deliver another record high; the Nasdaq however continued to lag behind for most of the day until the close, where it snapped a four-day losing streak.
  • The big news here is that for the first time since the pandemic, new jobless claims came in less than 500k. Last week saw only 498,000 new claims which topped analyst expectations of 533,000.
  • Non-farm productivity in Q1 saw an increase to 5.4% topping expectations of 3.7% and a decrease in costs by -0.3% slightly under the expected -0.6%.

Friday – May 7

  • The stock market is rising to record levels despite the disappointing April jobs report.
  • The weak number may be fueling the notion that easy monetary policies powering the market’s historic rebound will stay in place for longer.
  • April nonfarm payrolls increased by just 266,000, far less than the 1 million total economists were expecting.
  • The unemployment rate rose to 6.1% last month amid an escalating shortage of available workers, higher than an expectation of 5.8%.
  • March’s originally estimated total of 916,000 was revised down to 770,000.
  • Investors are betting on the likelihood that the big jobs miss could keep the easy policies of the Federal Reserve in place, including record-low interest rates and a massive bond-buying program.

Monday – May 10

  • The stock market might have lost steam in the final hours of trading but not until the Dow reached another record intraday high.
  • The Dow topped the 35,000 level for the first time but failed to close above it.
  • The Nasdaq fell as Tesla and Facebook both fell around 4%.
  • Colonial Pipeline, which transports 2.5 million barrels per day of gasoline, diesel, and jet fuel to several locations on the East Coast remains closed following a cyberattack by a hacker collective that calls itself DarkSide.

Tuesday – May 11

  • Stocks went for a wild ride with the Dow plunging 667 points at the low before ending the day with a 473-point decline.
  • Tech stocks led the Nasdaq down 2%, with FAANG stocks holding steadier than other stocks in the tech sector.
  • The JOLTS report shows 8.1 million openings across multiple sectors and industries against nearly 10 million unemployed.
  • The question is, why aren’t people competing for these jobs–a political debate concerning the effect of unemployment benefits, in which some claim they receive greater income remaining unemployed.

Wednesday – May 12

  • A tough day for stocks with the Dow plunging around 700 points and the Nasdaq plunging 3%.
  • A hotter than expected read on inflation–a rise of 4.2% year over year and the biggest rise in prices since 2008–triggered today’s panic selling.
  • Many analysts are concerned that today’s “transitory” inflation, as described by the Fed, may lay the groundwork for longer-term inflation.

Thursday – May 13

  • Stocks staged a decisive rebound with the Dow jumping 433 points.
  • The broader market seems to be shrugging off the hotter-than-expected read on inflation that caused the plunge in the previous sessions.
  • Last week’s new jobless claims came in better than expected, with 473,000 new claims filed versus the expected 475,000.
  • April’s Producer Price Index came in on the hotter side, up 6.2% year over year.

Friday – May 14

  • Stocks are rebounding for a second day led by tech and reopening trades after Wall Street’s week of big losses.
  • The market is showing resilience to not-so-great news even after data showed consumer purchases slowed down last month.
  • Retail sales were flat for April, as in zero growth as compared to analyst estimates of a 0.8% gain and a 9.8% surge in March.
  • Industrial production in April came in at 0.7%, missing consensus forecasts of 1.2%; manufacturing output logging in 0.4% when 1.8% was expected. Capacity utilization came around consensus levels at 74.9% versus the expected 75.2%.

That concludes Market Update for the 1st Half of May 2021! For more frequent FFR and market news, be sure to follow us on Instagram, Facebook, Twitter, and LinkedIn. Happy trading, everyone! Good luck!

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.