Weekly Economic Update: Stocks Struggle While Corporations have Positive Earnings

Presented by Nicholas Wealth Management

May 3rd , 2021


Weekly Market Update

In this week’s recap: Stocks struggle to find their way amid several noteworthy earnings reports from corporations.


The Week on Wall Street

Stocks meandered around a flatline in a busy week of corporate earnings, ending the trading week slightly lower.

The Dow Jones Industrial Average slid 0.50%, while the Standard & Poor’s 500 was flat (+0.02%). The Nasdaq Composite index surrendered 0.39%. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.18%.1,2,3


Seeking Direction

Though the S&P 500 and Nasdaq established new record highs at the start of the week, stocks struggled to find traction as the week wore on.4

Investor sentiment was dampened by rising COVID-19 infections in India and Japan, along with mounting inflation worries. Stocks finally caught some lift from strong quarterly reports issued by two big technology companies and an upbeat first-quarter Gross Domestic Product growth number, sending the S&P 500 to a fresh record high.5

Once again, though, stocks failed to follow through, as the market retreated in the final day of trading to close near where it began the week. 


Earnings Top Expectations

Last week was the biggest week of the first quarter’s earnings season with a third of S&P 500 companies reporting, including six of the largest companies.6

With expectations high, businesses generally topped Wall Street analysts’ estimates; Big Tech companies posted especially noteworthy earnings. Coming into last Friday, with 40% of S&P 500 index companies reporting, earnings-per-share growth (EPS) is now estimated to be 29.3%, well ahead of the 12.2% EPS growth rate that analysts had expected at the start of the year.7


Tip of the Week

Think about setting up a system to record your allowable income tax deductions and credits. Too many people spend too many hours trying to figure out deductions and credits in April.


Media

Joe Biden will introduce his MASSIVE capital gains tax hike this week. Here’s what he won’t tell you: For every 1% increase in the capital gains rate, there is a 1.2% reduction in capital gains transactions. David Nicholas joined Varney & Co. on Fox Business last Monday (4/26) to discuss the effects this could have on markets.
The biggest question today is whether the Federal Reserve will be honest about inflation. Bitcoin is surging because its investors don’t believe the Fed has inflation under control. David Nicholas joined Fox Business last Wednesday (4/28) to discuss the potential impacts of the FOMC meeting.

Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!



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CITATIONS:

1. The Wall Street Journal, April 30, 2021

2. The Wall Street Journal, April 30, 2021

3. The Wall Street Journal, April 30, 2021

4. CNBC, April 26, 2021

5. The Wall Street Journal, April 29, 2021

6. MarketWatch, April 25, 2021

7. The Earnings Scout, April 30, 2021

David Nicholas

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