18 May 2021

US Stocks Start Week Lower Amid Tech Weakness


News shaping
the markets today


What’s happening: US stocks closed lower on Monday, with the Nasdaq losing 0.6%.

What happened: Continuous weakness in technology shares resulted in a downbeat start to the week on Wall Street.

With the Q1 earnings season wrapping up, investors will be keeping an eye on some important companies due to release results today.

Why it matters: Last week’s higher-than-expected reading on inflation exerted pressure on the US equity markets. The S&P 500 tumbled around 4% through midweek, recovered slightly towards the back half and ended the week lower by 1.4%.

The tech-laden Nasdaq, which was hit the hardest by inflation fears, declined more than 2% last week, while the blue-chip Dow Jones index shed 1.1%. All three major indices recorded their worst week since February 26.

The US Consumer Price Index surged 4.2% in April, representing the highest rate since 2008. Accelerating inflation raised concerns around the Federal Reserve tightening its monetary policy sooner than expected.

The markets now await the release of minutes from the Fed’s latest meeting, which is scheduled for Wednesday and are expected to provide some insight into the central bank’s reaction to inflationary pressures.

Shares of Discovery and AT&T remained in focus on Monday, after the latter said it is in talks to merge WarnerMedia with Discovery.

Over 90% of the S&P 500 firms have reported their quarterly results till date, with around 86% of those surpassing earnings expectations.

The Dow Jones index shed 54 points to close at 34,327.79 on Monday, while the S&P 500 declined 0.25% to 4,163.29. The Nasdaq 100 tumbled 0.6% to settle at 13,312.91.

What to watch: Markets will closely monitor earnings results from Walmart, Macy’s and Home Depot today.

Investors also await economic data on housing starts and building permits from the US. Housing starts data, which jumped 19.4% to an annualised rate of 1.739 million in March, is expected to decline slight to 1.71 million in April. Building permits is projected to increase slightly to 1.77 million in April, from 1.766 million in the previous month.

US stocks could recover some of yesterday’s losses today, 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, ahead of the API’s (American Petroleum Institute) data on crude stockpiles.

Context: Oil futures settled higher on Monday, following signs of an improvement in demand from the US and Europe.

Details: The higher demand from the US and Europe is offsetting the impact of an increase in supply from the OPEC+ (Organization of the Petroleum Exporting Countries and its allies).

Despite China reporting weaker-than-expected economic data, crude oil closed higher on Monday. China’s retail sales grew 17.7% in April, down from 34.2% growth in the previous month and missing market expectations of 24.9% growth. Although the country’s industrial production rose 9.8% in April, it marked a deceleration from the 14.1% growth reported in March.

Weakness in the US dollar also provided some support to greenback-denominated oil prices. The ICE US dollar index, which measures the currency’s performance versus a basket of major peers, weakened on Monday to add to losses for this month.

A rise in US rigs also lent support to oil prices. Baker Hughes reported a rise in active US rigs drilling for oil by 8 to 352 in the latest week.

WTI (West Texas Intermediate) crude for June delivery gained 90 cents to settle at $66.27 per barrel on the NYMEX (New York Mercantile Exchange) on Monday. July Brent crude added 75 cents to reach $69.46 per barrel on ICE Futures Europe.

Among other energy futures, June gasoline gained 3 cents to close at $2.16 a gallon, while June natural gas gained 15 cents to reach $3.11 per 1,000 cubic feet.

What to watch: Traders await API’s data on crude oil stockpiles, which had declined by 2.533 million barrels in the week ending May 7.

Rising covid-19 cases in some parts of the world, including India and Brazil, remain a major concern for markets, with total global infections surpassing 163.3 million.

Other Markets: European trading indices closed lower on Monday, with the FTSE 100, German DAX 30, French 40 and STOXX Europe 600 down by 0.15%, 0.13%, 0.28% and 0.05%, respectively.

Support & Resistances
for Today


market snapshot


Futures at 0400 (GMT)

What else to watch today


UK’s claimant count change, employment change, unemployment rate and labour productivity, Italy's balance of trade, Eurozone's balance of trade, employment change and GDP growth rate, South Africa's SACCI business confidence index as well as America’s Redbook index.


ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.  This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.