Published: May 25th, 2021
On Thursday, May 20, the Dow Jones and S&P 500 futures shrunk marginally, while the Nasdaq futures clawed back the modest losses suffered during the previous trading session. All the major indexes danced around the key levels, with the Dow and S&P 500 finding support around their 50-day moving averages.
The futures of all the major indexes fell slightly on Thursday, May 20, after a stormy day characterized by a stock market rally. The Dow Jones and the S&P 500 futures tumbled slightly while the Nasdaq futures slashed the modest losses incurred during the previous trading session.
The markets witnessed the major indexes dancing around their key levels, with the Dow Jones and the S&P 500 finding their support around their 50-day moving averages. The Nasdaq closed slightly up of last week’s lows. Despite the marginal losses and the mixed signals presented through much of the week, all the indexes were down, marking the third straight week the indexes have dipped.
Federal Reserve policymakers hinted for the first time that they might consider talks about tapering bond purchases. While such news seemed to have positively influenced the Treasury yields and the dollar, the stock odometer was not nearly as moved.
Speaking of tumbles, Bitcoin slammed to just above $30,000 on Wednesday, May 19, before bouncing back sharply. However, the day’s closing figures were far significantly down compared to the previous day. The Bitcoin slide started when Tesla announced that it would not accept Bitcoin as a payment method for its car units because of climate change concerns.
Commodity-related stocks and equities such as miners, fertilizers, and metals all pulled back, as did crude oil, lumber, and copper. Airlines that had shown much promise earlier on fell back on Wednesday, May 19. Financials also struggled.
Target, Facebook, Alphabet, Trip.com, and Maravai LifeSciences, all flashed buy signals. However, the current market conditions have not been conducive for new buys.
Meanwhile, Synopsys, a chip design software maker, Cisco, and shipping giant Star Bulk Carriers reported their earnings. Cisco topped Q3 fiscal projections. However, the networking giant, also a significant component of the Dow, gave weak earnings per share (EPS) guidance. Cisco’s situation shoved its stocks down overnight, showing a sharp drop past the 50-day line. Overall, the shares slid by 0.75% to stand at $52.47 by midweek.
Synopsys earnings were above the fiscal Q2 projections. However, the company’s stocks rose only modestly during extended trade. The shares climbed about 1% to close at $237.36, resting close to their 200-day line but slightly below the 50-day average.
Star Bulk Carrier earnings seemed to be below expectations. Still, the returns left the giant shipping operation enough to pay shareholders dividends of 30 cents for every share. Overall, the shares of Star Bulk Carriers rose by 2% to close at $22.54, only slightly below their recent six-year high.
Ford Motors unveiled their F-150 Lightning, an electric pickup truck that targets enterprise customers. The unveiling follows a test drive by President Joe Biden. The carmaker says the model will manage a range of between 230 miles and 300 miles depending on the battery pack the company installs in the unit in question. Moreover, it comes with a towing capacity of 10,000 pounds.
The EV version of Ford’s bestselling pickup begins deliveries next spring, starting at $39,974 with a possible tax credit of $7,500. The news saw the carmaker’s shares climb by 1% in the premarket. However, Ford’s shares still dipped by 0.25% overall, just below their 50-day average. The stock has a buy point of $13.72, and analysts predict that investors may opt to use the move above the highs of $12.53 recorded on Tuesday, May 18, to hint at the early entry.
Besides, rivals are not anywhere near the development stages that can compromise Ford’s share performance. Rivian plans to launch its electric pickup model in June, while GM Hummer EV will not get to the showrooms until late 2021.
The Tesla Cybertruck, another perceived competitor, might not get off the production lines until 2022. Tesla admits that it does not have a complete design as yet. Besides, its Austin plant, the new model’s production base, is still under construction, and the new 4680 batteries are still several months away from mass production.
Meanwhile, analysts project that stocks’ momentum will follow the trends witnessed in the past few days if the message out of Washington holds.
According to Ed Carson, a staffer at Investors.com, economic growth is going on unabated. The situation creates a need to revise the fiscal and monetary policies the Federal Reserve is implementing, the journalist added. However, such discussions have been shelved by the Federal Reserve, which opts to maintain a dovish stance. But despite the overall approach to the country’s economic growth, there is increasing demand for piecemeal changes.
Some Fed Reserve officials have shown support for talks about tapering asset purchases in future meetings, at least if the rate of growth continues in its current trajectory. However, according to the April 28/29 Fed meeting minutes, even if the taper talks begin in June, the actual action would not occur for several months. Besides, the actual Fed rate increase from near zero is still a long way off.
As if reading from the Fed’s mood, the major indexes continued to flux around the market’s overall temperature. Typically, hints from the federal reserve about altering aggressive monetary policy often hurt stocks. However, with concerns that the central bank is lagging behind the curve on pressures of imminent inflation, Wall Street might be more responsive to taper talks.
A less aggressive Federal Reserve is good for the greenback and Treasury yields. However, it is bad news for gold and is proving to hurt Bitcoin as well. The situation might prove crypto enthusiasts right; both gold and Bitcoin as dollar alternatives are great inflation hedges.