July 23, 2021
DAILY MARKET COMMENT

Strong earnings from American Express (AXP), Twitter (TWTR) and Snap (SNAP) helped send the major averages into record territory at the bell on Friday as investors looked ahead to next week’s Q2 earnings reports from big cap technology and the FANG names. Investors punished shares of Intel (INTC) and Boston Beer (SAM) after disappointing earnings reports with Boston Beer sinking -26%. Chinese stocks were clobbered as the government moved to enforce more regulations on tech and education companies. Shares of TAL Education Group (TAL), New Oriental Education and Tech Group (EDU) and Gaotu Techedu Inc (GOTU) were all down 50-70%. Facebook (FB) led big cap tech stocks higher on expected blowout earnings and a raised price target to $480 from Credit Suisse. The company is now valued at $1 trillion after soaring more than 5% on the day. That made Communication Services (XLC) as the best performing sector, up +2.65%. Utilities (XLU), Consumer Staples (XLP), Healthcare (XLV) and Technology (XLK) also outperformed. Energy (XLE) was the only sector finishing in the red. The major averages vacillated in record territory in the afternoon and went into the weekend at new record highs. The majors melted up into the close and ended the session near the highs of the day with the DJIA adding 238.20 points (+0.68%) and finishing at 35061.55. The S&P 500 jumped 44.31 points (+1.01%) and settled at 4411.79, while the NASDAQ picked up 152.39 points (+1.04%) closing at 14836.99.

Breadth was mostly positive with advancing issues beating declining issues better than 5:3 on the NYSE and by 55 units on the NASDAQ. Declining volume was 64% on the NYSE, while advancing volume was 51% of the NASDAQ. The VIX eased 0.49 (-2.77%) and closed at 17.20. Crude oil prices rose 0.17 (+0.24%) and the September contract closed at $72.08 a barrel. Gold prices lost 3.30 (-0.18%) and finished at $1802.10 an ounce. Bitcoin (BTC) ended the session at $32,450.

The different indexes surged at the bell and held onto the gains as investors looked ahead to what’s expected to be blowout earnings from big tech giants next week. The July FOMC Meeting gets underway on Tuesday and market participants will be paying keen attention to hints that the Fed’s bond purchasing will begin to taper sooner than later at the Fed’s announcement on Wednesday. That could cause some volatility in the market. Finally, while big cap tech stocks have soared into earnings, don’t be too surprised if traders sell the news. I’d wait for prices to settle down after earnings before buying at these levels.

Earnings releases to watch for on Monday include: Bank of Hawaii (BOH), Cadence Design Systems (CDNS), Check Point Software Technologies (CHKP), F5 Networks (FFIV), Lockheed Martin (LMT), Markel Corp (MKL), Southern Copper Corp (SCCO), Tesla (TSLA) and Universal Health Services (UHS).

Monday’s Market Moving Economic Calendar: Dallas Fed Mfg Survey and T-Bill Auctions.

By David L. Blake, CMT