19 April 2021

Dow, S&P 500 Record Fourth Straight Week of Gains

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News shaping
the markets today

     

What’s happening: US stocks gained on Friday amid strong earnings reports from companies and solid economic data.

What happened: Wall Street closed another week on a strong note with the three major indices adding more than 1% each.

The Dow Jones index and S&P 500 recorded gains for the fourth consecutive week, while the Nasdaq 100 posted its third straight week of being in the black.

Why it matters: Morgan Stanley, the last of America’s six biggest banks to report earnings, announced upbeat results on Friday, driven by a robust trading and investment banking performance.

PNC Financial also reported its results on the last trading day of the week, beating both top- and bottom-line expectations.

Market sentiment was also lifted by several strong economic reports last week that signalled a recovery in spending, the labour market and consumer sentiment. The University of Michigan reported its preliminary reading of consumer sentiment for April, indicating a rise to a one-year high of 86.5, from 84.9 in March.

Data released on Thursday also showed retail sales surging sharply by 9.8% in March, backed by fiscal stimulus. The Labor Department announced a decline in jobless claims to 576,000 for the week ending April 10, hitting the lowest level since March 2020.

US stocks have been on an uptrend with improving risk appetite, backed by fiscal stimulus, the rollout of vaccines and various experts raising their projections for economic growth this year.

The S&P 500 has adding more than 11% year to date. Cyclical stocks have been among the biggest gainers so far this year, led by energy and financial stocks.

The Dow Jones index jumped 164.68 points to settle at 34,200.67 on Friday, a day after the blue-chip index breached the 34,000 mark for the first time. The S&P 500 gained 0.4% to a fresh closing high of 4,185.47, while the Nasdaq 100 edged higher by 0.1% to 14,041.91.

What to watch: With no major economic reports scheduled for release today, investors will focus on the covid-19 vaccination drive in the US.

Covid-19 cases remain one of the top concerns for markets, with infections in America surging past 31.6 million.

The Markets Today

     

The Canadian dollar will be in focus today ahead of the country’s housing starts report.

Context: The CAD/USD forex pair edged higher on Friday and ended the week with gains, despite the rapid rise in covid-19 infections in Ontario and some other provinces.

Details: Market sentiment was lifted by China reporting strong GDP growth of 18.3% for the first quarter. The news not only fuelled optimism around a global economic recovery, but also supported the Canadian dollar as China is the country’s second largest trading partner, behind only the US.

China’s economic growth report also sent oil prices higher. This further propelled the loonie, with crude being one of Canada’s major exports. Oil ended the week sharply higher, adding 6.3%, amid a stronger demand outlook driven by signs of an economic rebound in the US and China.

The CAD/USD was also supported by weakness in the US dollar, which recorded losses for a second straight week with bond yields retreating from their recent highs. The dollar index, which measures the greenback’s performance versus a basket of major rivals, shed around 0.2% on Friday and ended the week down 0.7%.

The Canadian dollar settled slightly higher at 1.2507 versus the US dollar on Friday. The CAD/USD forex pair added around 0.2% last week.

What to watch: Markets await data on housing starts from Canada, which are projected to rise to 250,000 units in March, after declining 13.5% to 245,922 units in February.

Traders will also focus on the Bank of Canada’s update on economic projections, scheduled to be announced later this week.

Other Markets: European trading indices closed higher on Friday, with the FTSE 100, German DAX 30, French 40 and STOXX Europe 600 up by 0.52%, 0.34%, 0.85% and 0.90%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Eurozone’s current account and construction output, Brazil’s IBC-Br index of economic activity, consumer confidence and Central Bank of Brazil’s focus market readout as well as Australia's new home sales.

 

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