Thursday, April 15, 2021
Top Story
Sector makeups are very different around the world
We see several reasons to at least consider giving international equities a closer look, including valuations and an improved outlook for value stocks. However, a look at very different sector compositions for major global markets gives us pause. We continue to favor fundamentals for the U.S. and emerging markets over developed international and suggest tactical investors remain patient with Europe. For more insights, see today’s LPL Research Blog, available today after 12p.m. ET.
Daily Insights
U.S. stocks are being lifted by positive sentiment from stronger than expected retail sales and jobless claims data
- European markets are modestly higher in midday trading with the United Kingdom outperforming.
- Asian stocks were mixed overnight with Hong Kong underperforming as internet and technology sectors weighed on indexes.
Jobless claims drop more than expected
- 576,000 Americans filed for unemployment insurance, below the Bloomberg consensus forecast of 700,000 and the lowest weekly reading since March 2020.
- Claims from the prior week were revised slightly higher from 744,000 to 769,000, but the data still underscores the continued improvement in the U.S. labor market as vaccination efforts embolden policy makers to lift restrictions on activity.
Fiscal stimulus aids the rebound in retail sales
- Retail sales have been off to a volatile year in 2020, with data vastly surpassing expectations in January only to disappoint in February as winter storm disruptions hindered activity.
- March retail sales rebounded in a big fashion with the assistance of additional direct stimulus payments, rising 9.8% month over month, ahead of the Bloomberg consensus forecast of 5.8%.
- The 9.8% month over month gain even surpassed the high water mark in January, marking the highest monthly jump for retail sales in 10 months.
- We take a closer look at today’s retail sales data and what it means for the path of the recovery in today’s LPL Research blog.
Strong start to earnings season
- S&P 500 Index earnings are tracking to a 28% year-over-year increase, already 4 percentage points above estimates at quarter-end with only 28 S&P 500 companies having reported (source: FactSet).
- Financials have driven the upside, having benefited from strong capital markets activity and significant releases of loan loss reserves.
- The 30% year-over-year earnings increase we cited as achievable for the first quarter in the April 12 Weekly Market Commentary could now be viewed as conservative.
Technical update
The S&P 500 posted its worst day so far in April on Wednesday, falling 0.4%. Growth stocks led the way lower, as the consumer discretionary and technology sectors both lost 1.2%. Stocks are surging this morning, but the Nasdaq Composite would need a more than 2.5% gain to set a new record high above 14,175.
The Earnings Boom Is Here
The outstanding fourth-quarter earnings season we had in 2020 is a tough act to follow, but 2021’s first quarter has the makings of another potentially great earnings season. Learn more in this week’s Weekly Market Commentary.
Earnings Season Is Here
On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discuss why they think another very solid earnings season is on the horizon.
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All index and market data are from FactSet and MarketWatch.
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