Stocks and index ETFs were mixed to start the week, as the S&P 500 attempted a move higher in volatile trading on Monday while investors await tech earnings this week.
The tech-heavy Nasdaq Composite led the major stock benchmarks, moving 0.4% higher after tagging a new high earlier in the day. The Dow Jones Industrial Average traded 0.7% lower.
Major stock ETFs are mixed on Monday in afternoon trading. The SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are both showing small gains, while the SPDR Dow Jones Industrial Average ETF (DIA) is off nearly half a percent.
Earnings Releases Galore
This week is a big one for corporate earnings releases, with 13 Dow components and 111 S&P 500 enterprises ready to report earnings. Key companies that could move the market include Apple, Microsoft, Netflix, Tesla, McDonald’s, Honeywell, Caterpillar, and Boeing, with Apple and Tesla already gaining over 2.5% apiece Monday.
“The Street is anticipating robust results from Apple on Wednesday after the bell with Cupertino expected to handily beat Street estimates across the board,” wrote Dan Ives of Wedbush, who raised his 12-month price target on Monday to $175. “While the Street is forecasting roughly 220 million iPhone units [for 2021], we believe based on the current trajectory and in a bull case Cupertino has potential to sell north of 240 million units.”
There are some concerns of froth in the market however, with speculative action in stocks like GameStop, which rocketed 140% Monday, making some investors leery that parts of the market were disconnecting from fundamentals.
“Signs of excess continue to concern investors, with markets at near-record highs on a variety of valuation metrics,” said Mark Hackett, Nationwide’s chief of investment research. “Other signs of extreme optimism include put-call ratios, credit spreads and momentum indicators.”
Still, the commencement of the earnings season has been generally strong. 73% of companies are already reporting better numbers for both sales and EPS, according to data from Bank of America. Bank of America said this is following a pattern similar to last quarter, when the number of companies outperforming estimates reached a record.
Analysts and investors continue to monitor advancements in President Biden’s fiscal stimulus plan, as well as the vaccine rollout, as the number of coronavirus cases continues to increase in the U.S. and abroad. Nevertheless, economists are projecting more growth later in 2021.
“We continue to expect that a reduction in virus risk due to mass vaccination coupled with fiscal support for consumer spending will lead to a mid-year consumption boom and very strong growth in 2021,” Jan Hatzius, chief economist at Goldman Sachs, said in a note to clients over the weekend.
While fiscal support seems more likely, Hatzius noted that consumers remaining concerned that new strains of a vaccine-resistant virus could roil markets.
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