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End of Day Brief - Monday April 26 - New highs for S&P, Nasdaq

SP 5004187.62+7.45(0.18%)
10-yr Note -22/321.570
NYSEAdv 2044 Dec 1230 Vol 813.4 mln
NasdaqAdv 2823 Dec 1368 Vol 4.4 bln

Industry Watch

Strong: Information Technology, Consumer Discretionary, Energy
Weak: Health Care, Utilities, Consumer Staples, Industrials

Moving the Market

-- S&P 500 sets intraday record high, Nasdaq closes at record high

-- Investors appeared to be cautiously optimistic ahead of busy week of news

-- Mixed sector performances

The S&P rose to a record closing high in Monday trading after having seen its first weekly decline since mid-March last week, although the Dow slid a bit. Investors appear to be showing confidence amid what has so far been a solid earnings season as they bet that the Federal Reserve, which meets this week, will remain ultra-accommodative.

ECONOMIC EVENTS: In the U.S., durable goods orders rebounded 0.5% in March, though this was not as strong as expected. The Dallas Fed manufacturing index climbed 8.4 points to 37.3 in April, which was much stronger than expected.

The Federal Reserve's FOMC meets Tuesday and Wednesday, but the market is not really looking for any surprises or significant changes in the outlook versus March. This meeting also does not include the release of new economic projections.

TOP NEWS: Shares of Apple (AAPL) were in focus after the U.S. tech giant announced efforts to accelerate its U.S. investments, with plans to make new contributions of more than $430B and add 20,000 new jobs across the country over the next five years. Apple is now raising its level of commitment by 20% over the next five years, which it said includes "tens of billions of dollars" for next-generation silicon development and 5G innovation across nine U.S. states. As part of its investments and expansion, the company plans to invest over $1B in North Carolina and will begin construction on a new campus and engineering hub in the Research Triangle area that will create at least 3,000 new jobs in machine learning, artificial intelligence, software engineering, and other fields, Apple said.

On Friday, the Food and Drug Administration announced that following a safety review, the agency and the Centers for Disease Control and Prevention determined that the recommended pause regarding the use of the Johnson & Johnson (JNJ) COVID-19 vaccine in the U.S. should be lifted and use of the vaccine should resume. The decision came after a CDC advisory panel concluded that the benefits of the vaccine outweighed any risks.

In M&A news, Proofpoint (PFPT) shares surged 31% after the company agreed to be acquired by Thoma Bravo for $176 per share in cash in a deal that values the company at roughly $12.3B. Along with the deal announcement, Proofpoint reported better than expected first quarter earnings and revenue but suspended its 2021 financial guidance.

Meanwhile, shares of W.R. Grace (GRA) were 6.4% higher after the company agreed to be acquired by Standard Industries Holdings in an all-cash transaction valued at roughly $7B. In light of the announcement, W.R. Grace will suspend payment of its dividend going forward.

MAJOR MOVERS: Among the noteworthy gainers was Luminar (LAZR), which rose 15% after partnering with Airbus (EADSY) with the goal to enable autonomous aircraft operations. Also higher was Akamai (AKAM), which rose 2.6%. Piper Sandler analyst James Fish noted that Akamai shares outperformed tech peers and the broader market today, which he attributes to a report speculating that an activist may become involved again after Elliott Management had previously been involved and reportedly pushed for a sale in 2018.

Among the notable losers was Etsy (ETSY), which fell 4.4% after KeyBanc analyst Edward Yruma downgraded the stock to Sector Weight from Overweight. Also lower was Albertsons (ACI), which fell 5% after reporting quarterly results.

Reviewing Monday's economic data:

  • Total durable goods orders rose 0.5% month-over-month in March ( consensus 2.0%) following an upwardly revised 0.9% decline (from -1.1%) in February. Orders, excluding transportation, jumped 1.6%, in-line with the consensus estimate, after declining an upwardly revised 0.3% (from -0.9%) in February.
    • The key takeaway from the report is that business spending bounced back after the February downturn. That was seen in the 0.9% increase in nondefense capital goods orders, excluding aircraft.

Looking ahead, investors will receive the Conference Board's Consumer Confidence Index for April, the FHFA Housing Price Index for February, and the S&P Case-Shiller Home Price Index for February on Tuesday.

  • Russell 2000 +16.4% YTD
  • S&P 500 +11.5% YTD
  • Dow Jones Industrial Average +11.0% YTD
  • Nasdaq Composite +9.7% YTD

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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