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Markets closed Monday regular trading flat as a pancake, following a morning high that saw investors reacting to a stronger-than-expected Empire State survey, and looking forward to the singing of a $1.2 trillion Infrastructure Bill into law by President Biden, which is occurring as I write this. The Dow and Nasdaq were both -0.04% on the day, while the S&P 500 closed at +0.001%. Only the small-cap Russell 2000 had any depth to its performance today, finishing down -0.45% on the day.
The Dow was +136 points at session highs, and the Nasdaq has just snapped a two-day winning streak on the markets. For the S&P 500, it remains within 1% of its all-time trading high. So what we may be seeing today is a “sell the news” event, especially in relation to the long-expected Infrastructure Bill finally being enacted.
For proof of this, simply look at building and basic materials stocks over the past month: Vulcan Materials (VMC - Free Report) and Martin Marietta (MLM - Free Report) are both +12%, and averaged out in Monday trading are flat on the day. Analysts are still taking a hard look at inflation creeping into the economy — as well as the tools used to fighting inflation either potentially being ineffective or actually contributing to further strains pushing prices higher.
As Treasury Secretary and former Fed Chair Janet Yellen recently stated that inflation might be kept at bay if the labor force escalates in a timely manner. Increased productivity is traditionally a good remedy for capping inflation, as is raising interest rates. Yet with the Fed only today begun its tapering process, rising rates is some ways off, and if it takes significantly higher wage growth (which is already notably up) to bring the labor force to desired capacity, this could actually exacerbate inflation conditions.
In the Infrastructure package also includes $7.5 billion to build-out EV charging stations. As a result, the EVB market had been seeing a surge in shares prices. None higher, in fact, than Rivian (RIVN - Free Report) , which just held the most successful IPO in recent memory last week. Rivian shares grew another 15% today, now +90% since the IPO. On the other side of the coin, Tesla (TSLA - Free Report) has so far given up -11% month to date. While no one sees Rivian as a direct competitor to Tesla in 2021 or ’22, what this trading suggests is a finite amount of money being invested in the EV market at this time, even with the infrastructure boost.
Tomorrow morning brings up Walmart (WMT - Free Report) fiscal Q3 earnings results, with expectations up modestly year over year: to $1.39 per share on $135.74 billion in revenues for the quarter. Walmart is looking for its third-straight positive earnings surprise. Shares are +3.7% in the past month, but flat year to date.
Walmart also leads the surge of big-box retailers reporting this week, which also includes Zacks Rank #1 Macy’s (M - Free Report) , Zacks Rank #2 Home Depot (HD - Free Report) and Zacks Rank #3 Target (TGT - Free Report) . Walmart also carries a Zacks Rank #3 into tomorrow’s release, with a Value-Growth-Momentum score of A.
Image: Bigstock
Flat-as-a-Pancake Markets Temper Exuberance
Markets closed Monday regular trading flat as a pancake, following a morning high that saw investors reacting to a stronger-than-expected Empire State survey, and looking forward to the singing of a $1.2 trillion Infrastructure Bill into law by President Biden, which is occurring as I write this. The Dow and Nasdaq were both -0.04% on the day, while the S&P 500 closed at +0.001%. Only the small-cap Russell 2000 had any depth to its performance today, finishing down -0.45% on the day.
The Dow was +136 points at session highs, and the Nasdaq has just snapped a two-day winning streak on the markets. For the S&P 500, it remains within 1% of its all-time trading high. So what we may be seeing today is a “sell the news” event, especially in relation to the long-expected Infrastructure Bill finally being enacted.
For proof of this, simply look at building and basic materials stocks over the past month: Vulcan Materials (VMC - Free Report) and Martin Marietta (MLM - Free Report) are both +12%, and averaged out in Monday trading are flat on the day. Analysts are still taking a hard look at inflation creeping into the economy — as well as the tools used to fighting inflation either potentially being ineffective or actually contributing to further strains pushing prices higher.
As Treasury Secretary and former Fed Chair Janet Yellen recently stated that inflation might be kept at bay if the labor force escalates in a timely manner. Increased productivity is traditionally a good remedy for capping inflation, as is raising interest rates. Yet with the Fed only today begun its tapering process, rising rates is some ways off, and if it takes significantly higher wage growth (which is already notably up) to bring the labor force to desired capacity, this could actually exacerbate inflation conditions.
In the Infrastructure package also includes $7.5 billion to build-out EV charging stations. As a result, the EVB market had been seeing a surge in shares prices. None higher, in fact, than Rivian (RIVN - Free Report) , which just held the most successful IPO in recent memory last week. Rivian shares grew another 15% today, now +90% since the IPO. On the other side of the coin, Tesla (TSLA - Free Report) has so far given up -11% month to date. While no one sees Rivian as a direct competitor to Tesla in 2021 or ’22, what this trading suggests is a finite amount of money being invested in the EV market at this time, even with the infrastructure boost.
Tomorrow morning brings up Walmart (WMT - Free Report) fiscal Q3 earnings results, with expectations up modestly year over year: to $1.39 per share on $135.74 billion in revenues for the quarter. Walmart is looking for its third-straight positive earnings surprise. Shares are +3.7% in the past month, but flat year to date.
Walmart also leads the surge of big-box retailers reporting this week, which also includes Zacks Rank #1 Macy’s (M - Free Report) , Zacks Rank #2 Home Depot (HD - Free Report) and Zacks Rank #3 Target (TGT - Free Report) . Walmart also carries a Zacks Rank #3 into tomorrow’s release, with a Value-Growth-Momentum score of A.
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