US Stocks Jump Sharply On Value Buying

4:27 pm Friday, May 14th, 2021

The stock market remains in a rebound frame of mind and the wall street ended sharply higher on Friday. All 11 sectors closed higher, the advance-decline at the NYSE and Nasdaq futures advanced by a sizable margin, and there was strength in both growth and value stocks. The CBOE Volatility Index is back under 20.00, down 17.35% to 19.12.

Dow Jones Industrial Average 34,382.13+360.68 (1.06%)
Nasdaq Composite 13,429.98+304.99 (2.32%)
S&P 500 4,173.85+61.35 (1.49%)
Russell 2000 Index 2,222.45 +48.48 (2.23%)
Bitcoin 50,235.9 (+3.37%)

Notably, there was relative strength in the mega-cap stocks, which was an influential source of support underpinning the broader market.

The energy sector (+2.3%) bounced back and was today’s best-performing sector, yet it is the gain in the information technology sector (+1.6%) that was carrying the most weight in moving the market.

Chips gave a lift to the technology sector, extending gains in the wake of a Reuters report that lawmakers in Washington are close to unveiling a $52 billion dollar proposal to aid U.S. microchip production.

There was a slate of economic data this morning that was mixed relative to expectations. Retail Sales for April were weaker than expected, Industrial Production in April was as expected, and the University of Michigan Consumer Sentiment Index for May was weaker than expected, showing consumer attitudes were adversely impacted by rising inflation expectations. On a related note, the Import and Export Price Index for April also showed rising inflation.

The Treasury market has digested the inflation angle in a remarkably calm fashion. The yield on the 10-yr note is down three basis points to 1.64%. The connection for many equity traders is that, if the Treasury market isn’t going to get discombobulated by the inflation news, then why should the equity market?

Walt Disney (DIS) bucked the positive trend after missing revenue estimates and missing lofty expectations for Disney+ subscriber growth. Conversely, Airbnb (ABNB) and DoorDash (DASH) reacted positively to their reports, especially DASH with its over 22% gain.