Wall Street bulls kick-start the new month

May 4, 2021 - 2 weeks ago
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U.S. stocks climbed on Monday, the first trading day of May, as investors welcome the economic reopening and relaxed pandemic restrictions.

Gains were seen from the S&P 500 and the Dow indexes, while the Nasdaq Composite index struggled as Tesla Inc. and Amazon.com Inc. weighed on the index.

At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average climbed +238.38 points, or +0.70%, to 34,113.23.

The broad-based Standard & Poor’s 500 Index rose +11.49 points, or +0.27%, to 4,192.66, while the rich-tech Nasdaq Composite Index dropped -67.56 points, or -0.48%, to 13,895.12.

Tesla fell -3.46%, after industry news sources reported the electric-vehicle maker, under scrutiny in China over safety and customer service complaints, is boosting its engagement with mainland regulators and beefing up its government relations team.

Meanwhile, Amazon slipped -2.33%, Facebook tumbled -0.77%, while Apple added +0.8%.

Despite the mixed opening for the new month, the S&P 500 notched its third straight month of gains in April, adding more than +5% to the index as investors bet on a big economic and profit recovery from the pandemic.

The S&P 500 is now up more than +11% for the year.

The Dow rose about +2.7% last month, while the Nasdaq Composite gained +5.4% in April.

Confidence returning on the economic reopening led the market advance, especially retailers.

Royal Caribbean and American Airlines rose more than +1% each.

Gap rallied more than +7%, while Dillard’s climbed nearly +10%, while Macy jumped +8%, with Urban Outfitters and Kohl’s both gained more than +5%.

The rally upon these stocks came after New York Governor Andrew Cuomo announced that most capacity restrictions will be lifted across New York, New Jersey, and Connecticut, while 24-hour subway service will resume in New York City later this month.

Berkshire Hathaway shares gained +1.6% after Warren Buffett’s conglomerate reported a 20% surge in operating earnings and continued to buy back large amounts of its own shares.

Buffett also said to news sources that when he is no longer in charge, Greg Abel, vice chairman of all non-insurance operations, will succeed him.

Some investors are expecting weakness in the new month given the old “sell in May and go away” Wall Street adage.

This adage dictates that from now to October is often a less profitable and more bumpy time for stocks.

It is assessed, investors could convert to cash at the start of May and then buy into a dip later in the fall.

“With stocks at record highs, some investors may be tempted to follow the old adage.”

On the data front, IHS Markit data showed U.S. manufacturing activity grew at a record-high speed last month, with April’s Manufacturing Business Activity PMI Index rising to 60.5, matching the forecast.

However, a separate gauge from Institute for Supply Management signalled a slowdown in manufacturing expansion.

For April, the ISM Manufacturing PMI came in at 60.7, compared to the expected 65.0 and March’s level of 64.7.

This Friday, traders will focus on the jobs report from the U.S., which will provide insights into the state of recovery of the labour market.

The Non-Farm Employment Change forecast is seen for a rise of 975,000, with the previous release at 916,000, while the Unemployment Rate forecast at 5.7%, with the last release at 6.0%.

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