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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 34043.49 +227.59 (0.67%)
Nasdaq 14016.83 +198.40 (1.44%)
SP 500 4180.17 +45.19 (1.09%)
10-yr Note -2/32 1.567
NYSE Adv 2532 Dec 714 Vol 778.4 mln
Nasdaq Adv 3077 Dec 1079 Vol 4.3 bln

Industry Watch
Strong: Information Technology, Materials, Financials
Weak: Consumer Staples, Utilities

Moving the Market

-- Investors play down tax concerns and buy the dip

-- New home sales surge in March

-- Disappointing earnings reactions in Intel (INTC), Honeywell (HON), and American Express (AXP) contributed to relative underperformance of Dow

Investors play down tax concerns and buy the dip
23-Apr-21 16:20 ET
Dow +227.59 at 34043.49, Nasdaq +198.40 at 14016.83, S&P +45.19 at 4180.17

[BRIEFING.COM] The S&P 500 advanced 1.1% on Friday, recouping all of yesterday's tax-related decline, as investors bought the dip in most sectors of the market. The Nasdaq Composite (+1.4%) and Russell 2000 (+1.8%) outpaced the benchmark index while the Dow Jones Industrial Average trailed with a 0.7% gain.

The session started on a cautious note, as investors continued to contemplate reports that President Biden will propose increasing the capital gains tax rate for the wealthy. Talking points were more optimistic today, comprising of speculation that negotiations could reduce the rate, strategies to work around the taxes, and observations about the market's historical ability to weather tax increases.

The calmer demeanor lent itself to a familiar buy-the-dip mindset, further supported by data showing new home sales surge 20.7% month-over-month in March to a seasonally adjusted annual rate of 1.021 million (Briefing.com consensus 912,000). This was the highest annual rate of sales since August 2006.

Gains were spread across nine of the 11 S&P 500 sectors in a steady advance led by the financials (+1.9%), materials (+1.7%), and information technology (+1.4%) sectors. The resilient nature of the market presumably rekindled a fear of missing out on further gains and possibly short-covering activity.

There was a slight hiccup in the last 25 minutes of action, though, that pushed the consumer staples (-0.2%) and utilities (-0.2%) in the red on a closing basis.

Shares of Intel (INTC 59.24, -3.33, -5.3%), Honeywell (HON 224.51, -4.75, -2.1%), and American Express (AXP 144.30, -2.86, -1.9%) struggled in negative territory following their earnings reports, contributing to the relative underperformance of the Dow. Each of these companies topped EPS estimates, but INTC issued downside Q2 guidance and AXP missed revenue estimates.

U.S. Treasuries traded little changed for the third straight day despite the strong new home sales report. The 2-yr yield increased one basis point to 0.15%, and the 10-yr yield increased one basis point to 1.57%. The U.S. Dollar Index declined 0.6% to 90.82.

WTI crude futures settled higher by 1.1%, or $0.70, to $62.15/bbl. On a related note, California Governor Newsome announced that the state will stop issuing new fracking permits by 2024.

Reviewing Friday's economic data:

New home sales surged 20.7% month-over-month in March to a seasonally adjusted annual rate of 1.021 million (Briefing.com consensus 912,000) from an upwardly revised 846,000 (from 775,000) in February. March marked the highest annual rate for new home sales since August 2006. On a yr/yr basis, new home sales were up a whopping 66.8%, having lapped a very depressed comparison period due to the pandemic.
The key takeaway from the report is that new home sales, which are counted when contracts are signed, rebounded sharply from the deep freeze experienced in the Midwest and South during February; however, the sizable drop in new home sales month-over-month in the West (-30.0%), and the higher proportion of new homes sold for $399,999 or less, also speaks to the increased affordability pressures being applied by high prices and rising mortgage rates.
The preliminary IHS Markit Manufacturing PMI for April increased to 60.6 from 59.1 in March. The preliminary IHS Markit Services PMI for April increased to 63.1 from 60.4 in March.

Looking ahead, investors will receive Durable Goods Orders for March on Monday.

Russell 2000 +15.0% YTD
S&P 500 +11.3% YTD
Dow Jones Industrial Average +11.2% YTD
Nasdaq Composite +8.8% YTD

WTI crude futures settle higher
23-Apr-21 15:30 ET
Dow +300.92 at 34116.82, Nasdaq +232.99 at 14051.42, S&P +54.62 at 4189.60

[BRIEFING.COM] The S&P 500 is up 0.3% and is now positive for the week, putting it on track for five straight weekly gains.

One last look at the sector standings shows financials (+2.1%) and materials (+1.9%) leading the advance with 2% gains, while the utilities sector (-0.1%) is the only sector trading in negative territory right now.

WTI crude futures settled higher by 1.1%, or $0.70, to $62.15/bbl. On a related note, California Governor Newsom announced plans to ban fracking by 2024.