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First Week of May Brings Volatility to Wall Street

The Dow eyed a weekly loss despite three consecutive records

Deputy Editor
May 7, 2021 at 1:08 PM
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The first week of May started off strong, as investors demonstrated reopening optimism as several states lifted Covid-19 restrictions. In addition, strong corporate earnings continued to boost investor sentiment. By Tuesday, however, things took a turn for the worse. Though the Dow finished the session marginally higher, it spent most of the day trading in red territory. A Big-Tech selloff and U.S. Treasury Secretary Janet Yellen's comments regarding interest rates took a massive toll on the S&P 500 and Nasdaq, too, both of which finished lower. 

Stellar earnings, paired with upbeat economic data, and U.S. President Joe Biden's statements about waving Covid-19 vaccine patent protections, helped stocks recover on Wednesday. In fact, the Dow went on to notch a record close. That happened again on Thursday, as the blue-chip index notched its second-straight all-time high on better-than-expected  jobless claims data. Additionallythe Nasdaq snapped its four-day losing streak in the final hour of trading. By Friday, however, the benchmarks were eyeing weekly losses following a disappointing April non-farm payrolls report, though indexes did rebound on the day and the blue-chip giant snagged a third-consecutive record high.

All Eyes on Vaccine Stocks

Stocks tied to the vaccine race made waves over the course of the pandemic, and with rollouts of now well underway, it should come as no surprise investors are eager to see the results. Pfizer (PFE) reported a first-quarter earnings and revenue beat, and raised its full-year guidance. Plus, the company moved to get vaccine approval for adolescents aged 12-15.

Elsewhere, Vaxart (VXRT) popped after reporting successful early-trial results for its oral Covid-19 vaccine candidate. Lastly, Moderna (MRNA) plummeted despite better-than-expected earnings and sales forecast. Instead, a revenue miss weighed on the stock.

Earnings Season in Full Steam

Another batch of high-profile corporate earnings reports rolled in over the last five days. Unfortunately for XPO Logistics (XPO), the company failed to capitalize on its quarterly win. The same was true for iRobot (IRBT), which plummeted despite a top-line beat. A handful of names had more successful trips to the earnings confessional, however, including Under Armour (UAA) and T-Mobile (TMUS) -- both of which attracted bull notes following their reports.

Several others had good news to share with investors. Regeneron Pharmaceuticals (REGN) redeemed itself after blowing past analysts' estimates, and so did ridesharing giant Uber (UBER), though analysts had mixed feelings about the latter. Roku (ROKU) also surprised Wall Street with a jaw-dropping profit, while AMC Entertainment (AMC) popped despite a wider-than-expected first-quarter loss.

Reports Continue to Pour In, Economic Data Slows

Looking ahead, the earnings season shows no signs of slowing down, with the likes of Airbnb (ABNB), Alibaba (BABA), Walt Disney (DIS), and Yeti (YETI) all slated to report. On the economic data front, it'll be a slow-building week. Investors will have little to digest at first, though a Federal budget balance, retail sales, and initial and continuing jobless claims data is sure to keep them busy later on.

In the meantime, traders can check out the latest Monday Morning Outlook, in which Schaeffer's Senior V.P. of Research Todd Salamone explores the cautionary tale of doji candles. Plus, Schaeffer's Senior Quantitative Analyst Rocky White took a look at how copper can be used to determine market strength  in his last Indicator of the Week.


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