What’s on the Agenda for this Week?
Stocks Fall from Record Highs, Tech Leads the Drop
Stocks declined Monday following the S&P 500’s fourth straight week of gains as investors turned their attention to a busy week of earnings reports.
The Dow Jones Industrial Average fell 211 points, or 0.62%, to 33,989, the S&P 500 dropped 0.8% and the tech-heavy Nasdaq was down 1.43%.
“When we’re facing a broad market that’s traded at record highs for weeks, (Monday’s) pullback is no surprise. Traders could be taking profits and looking for opportunities in new areas of the market,” said Chris Larkin, managing director of trading and investing product at E*Trade.
“And with a deluge of earnings activity this week from across industries, we may be in a bit of a holding pattern until investors digest any beats or misses on that front. Bottom line is that short-term volatility is typical when we’re knocking around market highs as traders look to uncover value,” Larkin added.
The two areas that have the greatest ability to impact backend pricing this week are: (1) Central Bank Palooza, and (2) Coronavirus.
(1) Central Bank Palooza: There will be key interest rate decisions and policy statements from China, the European Central Bank, Canada, Russia and Indonesia this week. ECB will get a lot of attention from bond traders as they said that they would step up and front load their bond purchase program at their last meeting. We need to see if they actually did do that and what their future plans/schedules are.
(2) Coronavirus: The faster the global economy gets going, the worse it will be for backend pricing. While the U.S. is seeing vaccination rates at 50%, globally, there has been a 12% increase in cases in the past week to hit a new record high.
Across the Pond
Japan: Industrial Production -1.3% vs. estimates of -2.1%. Capacity Utilization -2.8% vs. estimates of +3.2%.
On Deck for Tomorrow: Reaction to the overnight People’s Bank of China Interest Rate Decision and Policy Statement