Cisco Stock – Market Recap: Friday, April 16
Stocks traded higher Friday in another record-setting day on Wall Street, with a batch of stronger-than-expected economic data and corporate earnings results helping fuel a risk rally. The S&P 500 and Dow each rallied to record levels, with the latter extending gains well beyond the 34,000 level. The Nasdaq ended a choppy session slightly higher, with technology stocks steadying after recent gains. Chief US Economist at UBS, Seth Carpenter, and Columbia Threadneedle Investments Global Head of Fixed Income, Gene Tannuzzo, joined Yahoo Finance Live to discuss.
ADAM SHAPIRO: A little more than two minutes to the closing bell. Helping us get there will be Seth Carpenter, chief US economist at UBS, along with Gene Tannuzzo, Columbia Threadneedle Investments global head of fixed income. But as we get record to have some– as we get record– as we get ready to have some more records, Jared Blikre is going to teach me how to talk good. Jared.
JARED BLIKRE: Well, I get that at the tip of my tongue, too. And we are looking for record closing highs in the S&P 500, the Dow, and the NASDAQ 100, not the NASDAQ Composite. Also the S&P 500 Equal Weight– we’ll just throw that in there. We’re sitting on smallish gains, but we’ll take them. The Dow is up nearly half a percent. That’s good for 150 points.
Just looking at some of the weekly totals here, it looks like the Dow is going to be up 3.6% for the week. The Dow, the S&P 500 over 5%. And the NASDAQ up over 6%. And it has been a great week for the FAANG stocks. Kind of a mixed picture today. We got Apple and Facebook down. Amazon and Microsoft are in the green.
I want to take a look at one sector that hasn’t done so well today. And that is the energy sector. Now we’re seeing Exxon and Chevron off about half a percent. This is the biggest lagging sector of the day. Crude oil finished off marginally. But going into next week, I think focus is going to be on the reopening trade. And let’s take a look at how that’s doing today in terms of the travel sector. We got Royal Caribbean up 1%, Live Nation up 1%, Caribbean Cruise Lines down 1%, so kind of a mixed picture here. Not seeing any particular patterns on that front.
What a week for semiconductors there. Nvidia, it’s off today, but I just want to show you the five-day price action. There we go. After breaking to record highs earlier in the week, it is tacking on 10% gains. And we’ve got some nice gains for some of these other guys. We’re going to be doing a deep dive into the week that was and the week ahead at 4:30. So we’ll go over that then.
I do want to check out the sector action here. We see materials is the only one up over 1%, followed by utilities, consumer discretionary, healthcare, financials, staples. Again, no kind of rhyme or reason to that mix in leadership there. Just reflecting these broad-based gains that we’ve been seeing. Energy, notably, we were just talking about that. Energy the biggest laggard, down 9/10 of a percent. With a few seconds to go, just going to take a quick check on crypto because we can. Here is the closing bell on Wall Street. Bitcoin is down 1%, and so is Ether.
SEANA SMITH: We’re closing out another week here on Wall Street. All three of the major averages in the green. The Dow up 166 today. S&P up 15. NASDAQ up just around a tenth of a percent. You’re looking at record closing highs for the Dow, the S&P, and the NASDAQ 100. The S&P up for the fourth week in a row. The sector action, today at least, real estate and utilities leading the way.
We want to bring in our panel. We have Seth Carpenter of UBS, and we also have Gene Tannuzzo of Columbia Threadneedle Investments, a global head of fixed income there. Gene, first to you, just because of the action that we saw in the bond market this week. We saw a pullback in the 10-year yield. It caught some people by surprise because we got that parade of very, very strong economic data throughout the week. What’s your reading on the drop that we saw in the 10-year yield? Does it make sense?
GENE TANNUZZO: Well, look, I mean, the economic data have been strong, as you just pointed out. Certainly, retail sales yesterday and some of the housing data today were very firm. But you’re not going to find very many investors at this stage. You can’t justify a positive economic outlook. And so I think we’ve seen a pretty dramatic rise in the 10-year note, as it relates to the last six months, really.
And what we’re finding is probably a new trading range. So, the good news is there. It’s reflected in the price as we’re seeing vaccinations and reopening. And I think we’re likely to see that 10-year note settle into a range here for a little while. Maybe it’s 1 and 1/2 to 1 and 3/4, something in that range, before probably pressing higher later in the year.
ADAM SHAPIRO: Seth, one of your recent notes talks about what we saw earlier with retail sales really surging. And it came a little bit faster than a lot of us expected. Going forward, should be worried about the fact that stimulus runs out and that this surge may be petering out?
SETH CARPENTER: I don’t really think so. I mean, I think month to month, there’s going to be some noise. And this week’s retail sales report was huge. And some of it was clearly driven by the one-time stimulus checks, as well as a delay in terms of tax refunds that usually come in February. So, you know, April might look a little bit soft. But I don’t think the underlying trend of reopening is going to fade. In particular, you know, consumer spending on services is still something like 9% below where it was a year ago.
And as the risk from COVID falls, as vaccination rollout continues, I think that part of consumer spending is just going to normalize. And that should give us a pretty strong tailwind for at least the rest of this year.
SEANA SMITH: Seth, we also saw new lows there in initial jobless claims since the start of the pandemic. Is this– how are you viewing it? Is it a one-off number, or do you think it’s the start of a pretty encouraging trend?
SETH CARPENTER: I think it’s a continuation of an incredibly noisy trend. The decline probably slightly overstates things. In level terms, there’s probably a little bit of a noise there, states that have reported issues with possible fraud. So we take it as a weekly signal that’s got a lot of noise into it. But once you start looking at where the trend is going over three and four and five weeks, then I think that trend starts to tell you a fair amount. So I think things are inflected higher. We’ve been calling for March to be an inflection for quite some time. I was happy to hear Chair Powell use the same term when he was on “60 Minutes.” And I think that measure, in particular, claims, is just going to keep its downward trend.
ADAM SHAPIRO: Gene, one of the things that you’ve also been keeping your eye on has to do with the yields. And now is not the time perhaps to be chasing yields when it comes to bonds. And you’re advising people look at the short-term, not the long-term. Can you elaborate what that means to me as an investor who might be afraid of the noise that Gene was just talking about?
GENE TANNUZZO: Sure, well, look, Treasury yields have been rising. We’ve talked about that. But yields on credit sensitive products, in particular, high yield bonds and leveraged loans, have been coming down very significantly. And they’re still in positive territory in terms of total return year-to-date. But now when we look at where high yield spreads are, so the risk premium you get for going into riskier companies over treasuries, that’s at the skinniest that we’ve seen, or the most expensive we’ve seen since before the financial crisis in 2007.
So, history tells us it’s not a time you want to take an exceptional amount of credit risk, even though I completely agree with Seth, the economic outlook is one that’s, frankly, pretty exciting. So I think the way to earn a little extra yield but not take too many undue risks is to stay in shorter maturities. So, looking at sort of one to five-year credit sensitive assets, those tend to have a little more price– a little less price volatility and to do a little bit better as well if inflation is rearing its ugly head.
SEANA SMITH: Seth, we heard from President Biden on his infrastructure plan a couple of weeks ago. What’s your view just on how big of a boost that would be to the economy? Is that going to keep the economy humming along after the impact of the stimulus agreement fades?
SETH CARPENTER: Yeah, very much so is our view. Now, huge uncertainties. There’s a lot of politics to settle on in terms of the final number. But absolutely, we’re looking at something like between infrastructure and the other spending priorities probably $350, $375 billion per year on a flow basis. And so, any slowing in growth rates that you might get next year because the stimulus is here is starting to wane almost surely to be offset.
Now, the economy is also going to have to contend with some increase in taxes probably if the current reports out of Washington are to be believed. But I think on net, yeah, it’s going to keep us going reasonably well. We’re looking for high three’s in terms of growth rate for next year and then settling into high two’s in 2023, so, pretty sustained expansion.
ADAM SHAPIRO: Seth is the chief US economist at UBS. Gene is Columbia Threadneedle Investments global head of fixed income. Thank you both for joining us.
Cisco Stock – Market Recap: Friday, April 16
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