Before The Bell
The stock market started positively yesterday, on rising optimism about the worldwide economy and its recovery from the coronavirus pandemic and accompanying severe recession. Additionally, several states have loosened restrictions related to the coronavirus, while many people in the United States have received stimulus checks and vaccines. However, the Dow Jones Industrial Average started the trading session in the red, hurt by weakness in energy issues, but the S&P 500 and NASDAQ began in the green. Price movement throughout the day was quite positive, and the indices trended higher throughout the session. They eventually ended not too far from their daily highs. All told, the Dow closed higher by 103 points; the S&P 500 was up 27 points; and the NASDAQ rose 162 points. Overall, market breadth was slightly positive, as advancers outpaced decliners by a 1.2-to-1.0 ratio. Technology stocks were among the best performers on the day, while energy issues were among the weakest.
In commodity news, oil prices rebounded a bit yesterday, rising for the first time in six trading sessions. This was likely caused by higher demand expectations from a stronger worldwide economy.
Meantime, U.S. Treasury bond yields were largely lower, with long-term yields falling more than their short-term counterparts. This flattening of the yield curve usually is negative for earnings at financial companies. The VIX Volatility Index was lower yesterday as demand for options protection fell.
Meanwhile, the futures market started negatively in the aftermarket hours, giving back a portion of the session's gains. However, as the evening progressed, losses turned to gains and back again. By midnight, the futures markets were slightly in the red. Now, the Dow and S&P futures were decidedly negative, while the NASDAQ futures were in the green so far, suggesting a good day for technology stocks, but a weak one for other portions of the market.
Looking ahead this week, a good amount of economic data will be released, including the consumer sentiment index for March on Friday. Additionally, personal income and consumer spending for February will be released at that time. These reports should show how the consumer is faring and how the economy is progressing from the coronavirus-related shutdowns. Meantime, traders will be looking at several earnings reports at mid-cap companies over the coming days. Overall, we think most market participants will be looking to see how the economy is recovering from the pandemic.
- John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
