Daily Markets: Stocks Boosted in Wake of CDC's New Mask Rules
Today’s Big Picture
Ahead of this morning’s U.S. April Retail Sales and Industrial Production reports, equities in Asia and Europe are in rebound mode today and U.S. futures point to yesterday’s equity market claw back continuing when those markets open later this morning. Equity indices in Asia finished the day higher across the board spurred on in part by chip stocks with strength from Tokyo Electron (TOELY) and Advantest (ATEYY) rise 3-5%. In Europe, equity indices were also green across the screen with chatter that Germany may be on the verge of lifting pandemic-related restrictions, providing a boost. Eased guidelines announced by the CDC noted that in most settings, fully vaccinated people don’t need to wear masks indoors or outdoors, giving markets a boost.
With this morning’s U.S. April Retail Sales report, investors will be looking for signs consumers are opening their wallets as expected and the pace of the economic recovery is on track. Regarding the April Industrial Production report, particularly the manufacturing line item, we will be looking for indications to see if there's any meat to the chatter about supply chain bottlenecks, and if inflation concerns have started to ease.
Today’s a light day on the international data front, but a heavy one on the domestic side.
Foreign Direct Investment into China surged 38.6% YoY In January-April CNY 397.07 billion (USD 61.55 billion), after rising 39.9% in January-March.
Spain’s Inflation Rate rose 2.2% in April, matching the consensus forecast, and was up from the 1.3% reading in March.
Following Wednesday’s hotter-than-expected CPI data, yesterday’s Producer Price Index (PPI) also came in stronger than expected, rising 0.6% MoM in April, roughly double the expected pace, and at a 6.2% year-over-year pace. Core PPI was up 0.7% MoM and 4.6% YoY, both were also well ahead of expectations.
Today brings a mountain of economic data including April Retail Sales which are expected to have risen 0.5% MoM following March’s 9.7% increase, Import/Export Prices, Industrial Production, Manufacturing Production, Capacity Utilization, Business Inventories, Michigan Consumer Sentiment Report, and the usual weekly Baker Hughes Oil Rig Count.
Stocks rebounded a bit yesterday to end a 3-day losing streak. The S&P 500 rose 1.2%, with 445 of its components gaining on the day, to leave it down 2.8% for the week. The Dow added 1.3%, leaving it down 2.2% on the week, and the Nasdaq rose 0.7% bringing it to a 4.6% loss on the week while the Russell 2000 gained 1.7%, leaving it down 4.4%.
Energy was the sole sector to lose ground on the day while Industrial and Financials were the strongest. Volatility is up over 26% and bitcoin has fallen more than 15% while the 10-year Treasury yield declined slightly to 1.66% and gold rose to $1,827 an ounce.
Stocks to Watch
Coinbase (COIN) reported in-line revenue on in-line trading volume and verified user accounts in its first reporting since its public listing. Guidance for Q2 is expected to meet or exceed Q1 with full-year monthly transacting user forecasts raised 32% at the midpoint. The company plans to list Dogecoin within 6-8 weeks.
Shares of Walt Disney (DIS) traded off in after-market trading following mixed March quarter results with better than expected EPS but softer than consensus revenue. Weighing on the shares was the Disney+ miss subscriber count of 103.6 million vs. the 109 million expectation and the 29% drop in Disney+ average revenue per user due to the launch of Disney+ Hotstar. We’d point out the service had just 33.5 million subscribers exiting the March 2020 quarter. As expected, the pandemic continued to take a toll on the company’s Disney Parks, Experiences, and Products revenue for the quarter, which fell 44% YoY to $3.2 billion with an operating loss of $406 million.
Dillard's (DDS) reported April quarter EPS of $7.25, significantly better than the $2.16 consensus as revenue rose 72.8% YoY to $1.33 billion. Retail gross margin for the quarter jumped to 42.7% vs. 12.8% in the year-ago quarter. Per the company, "As vaccinations increased, stimulus money was released and warmer weather arrived, we saw sales increase over 2019 levels, with momentum continuing throughout the quarter.” We expect this will set the tone for next week’s rush of retail-facing quarterly earnings reports.
DoorDash (DASH) reported a 197.5% YoY increase in its March quarter revenue to $1.08 billion, well ahead of the $990 million consensus. Total Orders grew 219% YoY to 329 million, and Marketplace GOV grew 222% YoY to $9.9 billion. Orders for its non-restaurant categories grew over 40% QoQ to over 7% of Total Orders. According to management as the reopening and in-store dining increased across the US, the impact on DoorDash’s order volume was smaller than expected. For 2021, the company sees its 2021 Marketplace GOV in the range of $35.0- $38.0 billion, with 2021 Adjusted EBITDA in a range of $0- $300 million.
Airbnb (ABNB) reported a wider than expected bottom-line loss for its March quarter even though revenue of $887 million bested the $718 million consensus. Gross Booking Value for the quarter rose 52% YoY to $10.3 billion while Nights and Experiences Booked rose 13% YoY to 64.4 million. For the current quarter, the company sees its Nights and Experiences Booked business significantly higher than the highly depressed levels of Q2 2020, but below that of Q2 2019. In terms of revenue for the current quarter, Airbnb sees it significantly higher than that of Q2 2020, given the impact of COVID- 19 on the prior-year period, and to be at a similar level to that of Q2 2019. However, it also sees the positive momentum of recovery experienced in Q1 2021 to be partially offset by the continued uncertainty of travel restrictions and lockdowns in the Europe, Middle East, and Africa region.
Cybersecurity stocks such as Palo Alto Networks (PAWN), Fortinet (FTNT), and others should get another shot in the arm today following the news Ireland’s health service operator shut down all its IT systems today to protect them from a “significant” ransomware attack, crippling diagnostic services and forcing hospitals to cancel many appointments.
Reuters reports Taiwan Semiconductor (TSM) is weighing plans to pump tens of billions of dollars more into cutting-edge chip factories in the U.S. state of Arizona than it had previously disclosed but is cool on prospects for an advanced European plant.
CN (CNI) announced that following the completion of confirmatory due diligence, it submitted an enhanced binding superior proposal of $325 per share and merger agreement to the Kansas City Southern (KSU) Board of Directors.
Tyson Foods (TSN) announced it will sell its pet treats business to General Mills (GIS) for ~ $1.2 billion. That acquisition will enhance General Mills’ position in the $35 billion pet food industry, which is benefitting from increased pet ownership during the pandemic.
Wynn Las Vegas (WYNN) and Encore will communicate to guests that they are not required to wear a mask if they are fully vaccinated and are required to wear a mask if they are not. The resort trusts guests to take the appropriate precautions based on their personal vaccination status.
After today’s market close, there are no expected earnings reports to be had. Why? Because it is Friday and investors like us are headed for the weekend, and you should be too. Those looking to get a jump on quarterly earnings reports next week can visit Nasdaq’s earnings calendar page.
On the Horizon
- May 17: NY Empire State Manufacturing Index, NAHB Housing Market Index, Net Capital Flows
- May 18: Housing Starts, Building Permits, weekly Redbook Retail Sales, API Crude Oil Stocks
- May 19: weekly MBA Mortgage Applications, weekly EIA energy stocks, FOMC Minutes
- May 20: weekly jobless claims, Philly Fed Manufacturing
- May 21: Markit Services, Manufacturing, and Composite PMIs; Existing Home Sales
- May 24: Chicago Fed National Activity Index
- May 25: S&P/Case-Shiller Home Prices, Conference Board Consumer Confidence, New Home Sales, Richmond Fed Manufacturing
- May 26: Mortgage Applications
- May 27: Durable Goods Orders, GDP Price Index, Corporate Profits, weekly Jobless Claims, PCE Prices, Pending Home Sales, Kansas Fed Manufacturing Index
- May 28: Personal Income & Spending, PCE Price Index, Goods Trade Balance, Wholesale Inventories, Chicago PMI, Michigan Consumer Sentiment
- March 31: US equity markets closed for the Memorial Day holiday
Thought for the Day
“Your time is limited. Don’t waste it living someone else’s life.” ~ Steve Jobs
- Fortinet (FTNT), Palo Alto Networks (PAWN) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.