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S&P 500, Dow Close at Record to End Bullish Week of Earnings on High

Stock Markets Apr 16, 2021 22:29
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By Yasin Ebrahim – The S&P 500 and Dow closed at all-time highs Friday as the record run in stocks continued during a week of red-hot earnings and swashbuckling gains for tech.

The S&P 500 rose 0.36%, to a record intraday high of 4,185.47, the Dow Jones Industrial Average rose 0.48%, or 164 points, closing at record high of 34,200.67. The Nasdaq Composite was up 0.1%.

Morgan Stanley (NYSE:MS), Bank of New York Mellon (NYSE:BK) and PNC Financial Services (NYSE:PNC) reported first-quarter results that beat estimates on the top and bottom lines, but it was the latter that got the plaudits, rising more than 2%.

Other regional banks were also higher, with U.S. Bancorp (NYSE:USB) leading the charge, up almost 3% as its better-than-expected quarterly earnings released Thursday stoked optimism on Wall Street.  

U.S. Bancorp has started to "experience a rebound in its fee based businesses along with the improved credit picture, which should reassure investors that the company will navigate this downturn better than nearly all of its peers and should maintain its premium valuation to the group," RBC said.

Financials have been kept under pressure in recent session on falling yields, with analysts warning that any further deterioration in rates would likely continue to weigh on cyclicals.

"The bottom line here is - if the TNX (10-year Treasury yields) continues to push lower over the short-run, these themes / strategies [small-caps, value, and financials] will also continue to underperform (over the short-run)," Janney said.

Materials were lifted by an almost 9% surge in PPG Industries (NYSE:PPG) in the wake of its better-than-expected first-quarter results and upbeat second-quarter guidance released Thursday.

Sentiment on cyclicals were also helped by further signs of a bullish consumer following Thursday's blowout retail sales data.  

The University of Michigan said Friday its preliminary consumer sentiment index rose to a 86.5 in the first half of this month from 84.9 in March, hitting its highest level in a year.

Energy, meanwhile, slipped as oil prices gave up gains despite optimism over the global recovery after China reported record GDP growth in the first quarter.

Marathon Oil (NYSE:MRO), EOG Resources (NYSE:EOG), and Nov (NYSE:NOV) were among the biggest decliners.

Big tech, meanwhile, moved off session lows with the Fab 5 trading mixed even as U.S. bond yields drifted from session highs. 

Google-parent Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB), and Apple (NASDAQ:AAPL) were lower, while (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) were above the flatline.

Tech will continue to be in the spotlight next week as investors bullish earnings from megacap tech stocks. 

"We believe 1Q earnings over the coming weeks will be a major positive catalyst for tech names," Wedbush said in a note. "The sell-off in tech stocks has been painful over the past few months after a historic run as the bears have come out of hibernation mode focused on rich valuations, the rotation trade, and the end of the WFH trade."

Industrials were dragged lower by a 1% fall in Boeing (NYSE:BA) after inspectors reportedly found more electrical issues with 737 Max akin to those that led to jets being suspended from service last week, Reuters said, citing industry sources.

In other news, Splunk (NASDAQ:SPLK) fell more than 9% after KeyBanc downgraded the stock to sector weight from overweight following the resignation of chief technology officer Tim Tully.

The resignation comes at a "tough time" for the company as it transitions to a subscription model this year, KeyBanc said.

S&P 500, Dow Close at Record to End Bullish Week of Earnings on High

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