Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

S&P 500 Racks Up Gains as Tech Turnaround Continues After Recent Rout

Published 05/14/2021, 01:50 PM
Updated 05/14/2021, 01:57 PM
© Reuters.
US500
-
DJI
-
MSFT
-
DIS
-
GOOGL
-
AAPL
-
AMZN
-
OXY
-
MRO
-
TSLA
-
IXIC
-
META
-
HFC
-
GOOG
-
ABNB
-
DASH
-

By Yasin Ebrahim

Investing.com – The S&P 500 rose Friday, as tech continued its recovery following a recent rout, while cyclicals shrugged off a softer retail sales report amid optimism the consumer remains in good shape.

The S&P 500 rose 1.47%, the Dow Jones Industrial Average added 360 points, and Nasdaq Composite gained 2.1% 

Retail sales were flat in April, after an upwardly revised 10.7% jump in the prior month as spending fueled by stimulus checks dried up. But with consumers hoarding record amounts of cash, further progress on the reopening of the economy will see spending return in the spring and summer.

"Stimulus checks were mostly used up in March spending, but households now hold larger savings than they did pre-pandemic," Yelena Maleyev, an economist at Grant Thornton said in a note.

"New CDC guidance saying that vaccinated people no longer need to wear masks, added to more states reopening in May, will lead to more consumer activity during the spring and summer months," Maleyev added.

Consumer spending, which makes up two-thirds of the economy, has been earmarked by some as the key to sustain the broader market rally, particularly in economically-sensitive cyclicals stocks, as the support from monetary and fiscal stimulus will eventually be reined in.

"Going forward, as federal stimulus runs dry, consumer spending will be reliant on more organic means such as job and income growth," Stifel said.

Cyclicals including financials, consumer discretionary and energy were in the green, with energy leading the pack, up more about 3% amid rising oil prices.

Marathon Oil (NYSE:MRO), Occidental Petroleum (NYSE:OXY) and HollyFrontier (NYSE:HFC) were among the biggest gainers, up more than 6% on the day.

The reopening trade was also in vogue, supported by airlines and cruise lines up strongly.  

Tech stocks, meanwhile, continued to make gains as their recent rout appears to have made their valuations, which are sensitive to a faster pace of inflation, more palatable.

Google-parent Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB), and Microsoft (NASDAQ:MSFT) were up more than 2%, while Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN) gained more than 1%.

Tesla (NASDAQ:TSLA), the sixth biggest weighting on the S&P 500, was up 1%.

On the earnings front, meanwhile, high-flying tech names including Airbnb and DoorDash that had been battered recently returned to investors' shopping lists.

DoorDash (NYSE:DASH) raised its outlook on order value for the rest of the year after reporting earnings that missed, but revenue that topped analysts' estimates. Its share price rose more than 20%.

Airbnb (NASDAQ:ABNB) reported better-than-expected quarterly revenue, and said bookings were gaining momentum as the global travel restrictions ease, sending its shares 2% higher.

Walt Disney (NYSE:DIS) slipped 3% after its subscriber numbers and revenue during the first quarter fell short of analysts' estimates, casting some doubt among investors whether there is too much optimism baked into the expected growth of its streaming service, Disney+.

"We expect the DTC [Direct to Consumer] narrative to take a breather for a brief period … [but] moving beyond this hiccup … we continue to see the path to growing total DTC subs from 159mm today to 300-350mm by FYE-24 as structurally sound," RBC said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.