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May 5, 2021
Off The Charts Earnings | Daily Market Update

Earnings are off the charts

  • Perhaps the best thing we can say about the earnings upside generated by corporate America during Q1 2021—currently more than 22%—is that growth pierced the upper end of our earnings dashboard graphic, literally off the charts.
  • S&P 500 earnings growth is tracking to a 46% year-over-year increase for the quarter, best since Q1 2010.
  • Estimates for the next four quarters have impressively risen by 3.3% since earnings season began.
  • About 60% of S&P 500 companies having reported, with another 26% (133 companies) on the slate for this week.

View enlarged chart.

Daily Insights

U.S. stocks open higher after a solid month of returns in April

  • The S&P 500 Index gained over 5% for the month, while the Nasdaq Composite outperformed by a hair and the small cap Russell 2000
  • Despite the strong performance of stock markets in April, commodity markets may have stolen the show, as copper, steel, and natural gas each gained over 10% for the month.
  • European markets are modestly higher in midday trading while the United Kingdom is closed for the holiday.
  • Asian stocks traded lower overnight, though Japan and China were closed.

The week ahead

This week the following economic data is slated to be released:

  • Monday: Construction spending (Mar.), Institute for Supply Management Manufacturing (Apr.)
  • Tuesday: Trade balance (Mar.), Durable goods and factory orders (Mar.), wholesale inventories (Mar.), Markit Manufacturing Purchasing Managers’ Index (Apr.)
  • Wednesday: Markit Services Purchasing Managers’ Index (Apr.), Institute for Supply Management Non-Manufacturing index (Apr.), ADP employment survey (Apr.)
  • Thursday: Weekly initial and continuing claims, Unit Labor Costs and Productivity (Q1)
  • Friday: Nonfarm payrolls, unemployment rate , hourly earnings and average workweek (Apr.)

Technical update

The S&P 500 ended last week where it started: The second consecutive week that saw the benchmark index end flat. Gains in energyfinancials and communication services were offset by a more than 2% decline in the heavily-weighted tech sector. Of note, the Dow Jones Transportation Average posted its 13th straight week of gains, the longest streak since 1899 and a positive macro indicator.

COVID-19 news

The United States reported 29,000 new COVID-19 cases on Sunday, below the seven-day average of 49,000 (source: New York Times).

  • Northern states continue to report the highest new cases per 100,000, but broader trends in the region remain firmly lower following the spike in cases seen in March.
  • Over 100 million Americans are now fully vaccinated, over 40% of the adult population (source: CDC).

Time To Sell In May?

LPL Research notes some possible reasons for a pause in the rally and why any potential pullbacks won’t last very long. Learn more in this week’s Weekly Market Commentary beginning today at 1 p.m. ET.

Let’s Talk About Valuations

On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discuss why stocks might not be as expensive as many think and how the economy continues to improve faster than expected.



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Source: LPL Research