Before The Bell
The U.S. stock market moved nicely higher yesterday, aided by strength in the technology names. Of note, investors seemed willing to assume more risk, and less concerned about inflationary pressures and the possibility of higher interest rates. However, the shift in sentiment may prove to be short lived, as recent reports show that inflation may be starting to emerge. Further, many corporations have cited rising costs for raw materials and labor, which could create operational challenges and eventually usher in higher prices. Overnight, the international markets delivered a mixed session. In Asia, the Nikkei staged a solid advance. In Europe, the FTSE 100 logged an uneven performance. In the United States, the equity futures are currently trading higher, indicating a positive opening to today’s session.
In the corporate arena, many retail companies are now delivering their quarterly profit reports. Today, we hear from automotive parts company AutoZone (AZO), and lifestyle retailer Urban Outfitters (URBN). Software provider Intuit (INTU), and home builder Toll Brothers (TOL) will post their reports, as well. No doubt, these issuances will be widely followed, as investors look for signs that the retail sector is on the mend.
In economic news, there were no major reports were issued yesterday. Today, we will get a look at the consumer confidence numbers for the month of May. While analysts will want to see that the consumer remains optimistic, a very strong reading could stoke fears that the economy might be expanding too fast. Meanwhile, the housing market returns to the spotlight, as well. This morning, the S&P Case Shiller Home Price Index will be released, along with the new home sales figure for the month of April. On Thursday, the pending home sales report will be published. These items will be closely watched, as the real estate market plays an important role in the broader economy.
Technically, the S&P 500 Index has been quite volatile during the month of May. After moving higher earlier in the month, the index pulled back to its 50-day moving average. That level provided some support, and the market has been acting a bit better since. From a sector perspective, investors have been favoring stocks in the energy, financial, and basic materials sectors. Many of these names will likely benefit from the reopening of the economy, and increased investment in infrastructure and capital projects. However, technology also plays a key role in the economy, and many investors would like to see this part of the market display leadership again.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
