24 May 2021

US Stocks End Mixed Amid Heightened Volatility

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News shaping
the markets today

     

What’s happening: US stocks closed mixed on Friday, with the S&P 500 recording its first consecutive weekly loss since February.

What happened: Heavy weighted growth, Microsoft, Apple, Google parent Alphabet, and Amazon, recorded losses on Friday, exerting pressure on both the S&P 500 and Nasdaq 100 indices.

Despite recording losses on Friday, the Nasdaq ended the week higher, after a four-week losing streak.

Why it matters: Concerns over rising inflation and potentially higher US interest rates continued to hurt investor sentiment. Markets were also impacted by high covid-19 infections in some regions around the world.

Wall Street stocks remained volatile last week, following the release of minutes from the recent Federal Reserve meeting, which increased chances of a debate on the cutting back of stimulus measures.

Stronger-than-expected data on initial jobless claims lifted overall market sentiment on Thursday, and the Dow Jones index added 186 points. However, jobless claims dropping to a new pandemic low indicated a faster economic recovery, which impacted tech stocks. This is because tech stocks are perceived as less risky in an environment of slower economic recovery.

Market sentiment was supported on Friday by data on US manufacturing activity, which jumped to a record high. The flash reading of IHS Markit manufacturing PMI rose to 61.5 in May, from 60.5 in April. The figure exceeded expectations of a flat reading for the month.

The S&P 500 slipped 0.08% to close at 4,155.86 on Friday, after climbing around 0.7% earlier in the session. The Dow Jones index jumped 123.69 points to 34,207.84, driven by an upturn in Boeing’s stock after Reuters reported that the aircraft manufacturer is discussing plans to raise production of the 737 MAX. The Nasdaq 100 shed 0.61% to settle at 13,411.74 on Friday.

For the week, the broad equity benchmark lost 0.4% to record its first back-to-back weekly loss since February. The blue-chip Dow Jones index recorded a weekly decline of 0.5%, while the tech-laden Nasdaq added around 0.2% last week, ending a four-week downtrend.

What to watch: Investors await data on the Chicago Fed National Activity Index from the US today. The index is expected to rise to 2.5 in April, from March’s reading of 1.71, which was the strongest in eight months.

Wall Street is expected to start the week on a stronger note, with the Dow Jones futures trading higher by more than 100 points at 5am GMT.

The Markets Today

     

Crude oil will be in focus today after closing higher on Friday.

Context: Oil futures traded higher on Friday, as chances of a storm formation in the western Gulf of Mexico lifted energy prices. Despite gains in the final session, oil recorded losses for the week.

Details: The US National Hurricane Center said a weather system is forming over the Gulf of Mexico, which has a 40% chance of developing into a cyclone. The hurricane is expected to disrupt energy output and refinery activity in the region.

Meanwhile, the oil market remained under pressure due to prospects of the restoration of the Iran deal, which could lead to increased oil supply. On Thursday, Iran’s President reported that the US was ready to lift sanctions on his nation’s oil. However, no official confirmation was made by the US on the matter.

The positive mood was also supported by some improvement in the covid-19 situation in India, the world’s third-biggest energy consumer.

WTI (West Texas Intermediate) crude for July gained around 2.7% to close at $63.58 per barrel on the NYMEX (New York Mercantile Exchange) on Friday, after losing 2.2% in the previous session. July Brent crude gained 2% to settle at $66.44 per barrel on ICE Futures Europe, following a 2.3% decline on Thursday.

For the week, the US benchmark recorded a 2.7% decline, while the global benchmark fell 3.3%.

Other petroleum products also recorded gains on Friday, with June gasoline adding 1% to reach $2.07 a gallon and June heating oil rising 1.2% to $1.99 a gallon.

What to watch: Traders will continue to monitor India’s covid-19 situation. Any improvement in the country’s condition and the lifting of lockdowns will increase overall oil demand. Markets will also keep an eye on the western Gulf of Mexico’s weather status.

Other Markets: European trading indices closed mostly higher on Friday, with the German DAX 30, French 40 and STOXX Europe 600 up by 0.44%, 0.68% and 0.57%, respectively. The FTSE 100 bucked the trend, ending lower by 0.02%.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Turkey’s tourist arrivals, South Africa's SACCI business confidence index, Indonesia’s motorbike sales, Mexico’s mid-month inflation rate, Brazil's central bank focus market readout, as well as Russia's unemployment rate, gross domestic product, real wages and retail trade.

 

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