Before the Bell - Following back-to-back wins for the bulls the past two sessions on optimism about the economic recovery, Wall Street put in an unprepossessing performance yesterday. Balancing out the better feelings on the economy and a decline in Treasury note yields were concerns about the climb in new coronavirus cases in the United States as variants of the disease were becoming more commonplace. Still, optimism on the economic outlook was pervasive and that helped to soften the mild pullback in the market yesterday. Meantime, looking out at the new day, the futures are suggesting a somewhat higher opening when trading begins later this morning.   

What has brought about this optimism was the recent release of a trio of upbeat business reports. First, this past Thursday, the Institute for Supply Management issued data showing the strongest manufacturing performance in our country since 1983. Then, one day later, the U.S. Labor Department released a report showing that the nation had added 916,000 jobs in March, or about double the tally for the preceding month. Also, the jobless rate ticked down to 6.0% and average hourly earnings increased just nominally, thereby dousing fears of a rise in inflation. 

Finally, on Monday, the ISM reported a sharp jump in non-manufacturing activity in March, with its latest survey showing that such activity had jumped last month to a reading of 63.7. That far surpassed the 55.7 survey result published for February and moved well past expectations of 59.0. These three reports now suggest first-quarter GDP (gross domestic product) growth should comfortably pass 5%. Indeed, it could go substantially higher assuming upcoming data on housing and retail spending are supportive.   

As for the stock market yesterday, it began the session to the downside, albeit not materially so, and was mixed for much of the day, with the Dow just slightly in the red, while the NASDAQ began matters in the green and largely stayed there for the trading day. When all was said and done, the Dow, which had soared to another record on Monday, rising past 33,500, eased back late in the day finally closing near session lows, off by 97 points. The NASDAQ, up most of the day, would ease by seven points on a mild late selloff.

Finally, in news upcoming this afternoon, the Federal Reserve will issue the minutes from its last FOMC meeting. As for the day ahead, shares of reopening plays, such as airlines and cruise ships were higher in the pre-market. Overall, stocks seem a bit extended, but there is little appetite for selling.  - Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.