Before the Bell - The U.S. stock market put in a generally weak session yesterday, with notable losses in the technology names. Traders did not react well to remarks from Treasury Secretary Janet Yellen, which sparked concerned about inflationary pressures, and the potential for higher interest rates in the future. Nonetheless, it seems investor sentiment may now be turning around, as the U.S. equity futures are up nicely, indicating a higher start to today’s session.
Meanwhile, investors continue to sift through the numerous first-quarter profit reports being released. For the most part, corporate results have shown significant improvement. However, traders have been a bit hard to impress lately. This may be due to the fact that equities have been trading at elevated valuations, and investors have maintained high expectations going into the earnings season. Yesterday, CVS Health Corp. (CVS) delivered strong results and provided an upbeat view, sending that stock higher. In addition, pharmaceutical giant Pfizer (PFE) posted a constructive report, thanks, in part, to contributions from coronavirus vaccine sales. Today, we will hear from numerous names. General Motors (GM) weighed in with a favorable release early this morning. PayPal Holdings (PYPL) is slated to provide its release after the market closes.
Meanwhile, in economic news, the employment situation returns to the spotlight this week. Today, investors got a look at the Automatic Data Processing (ADP) Employment Change report for the month of April. The numbers showed solid improvement, but came in just below the consensus view. On Thursday, the weekly jobless claims will be released. Finally, on Friday morning, the government will deliver the non-farm payroll and employment report for the month of April. Many analysts on Wall Street are currently looking for a healthy increase in jobs, and for the headline unemployment rate to dip below the 6% mark. Of note, the monthly employment numbers are watched closely by traders, and some may be positioning their portfolios in advance of the news.
Elsewhere, the coronavirus vaccine rollout has been progressing relatively well on our shores. However, there are still concerns that variants of the virus may be taking hold, which could create additional challenges, if left unchecked. Furthermore, overseas, countries, such as India, are still struggling to contain the pandemic, and that could be an area of concern.
Technically, over the past few days, the S&P 500 Index has pulled back from its highs. However, it should be noted that equities have done quite well over the past several weeks. So, a pause here seems understandable, and may even be a healthy development. – Adam Rosner