Dow soars 318 points to record high as investors weigh new economic-recovery data

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Traders work on the floor at the New York Stock Exchange.

  • The Dow Jones Industrial Average pushed to a record high on Thursday.
  • Stocks found support as fewer-than-expected Americans filed for jobless benefits.
  • Home Depot, P&G and Apple were all up, helping the Dow push to fresh highs.
  • See more stories on Insider’s business page.

The Dow Jones Industrial Average notched a new record high Thursday as stocks pegged to the reopening of the economy got a boost from new labor-market data.

The blue-chips index pushed higher with retailer Home Depot and consumer products giant Procter & Gamble among the best performing shares. Companies with exposure to economic recovery have largely advanced this year on the back of data showing the world’s largest economy is improving after the recession brought on by the COVID-19 pandemic.

The Labor Department on Thursday said jobless claims totaled an unadjusted level of 498,000 last week. That was less than the 538,000 claims expected, on average, by economists surveyed by Bloomberg. The reading marked a new low for the pandemic era and was the fourth consecutive weekly decline. The April jobs report due Friday could show US payrolls jumped to 938,000, according to an Econoday estimate.

Here’s where US indexes stood at 4:00 p.m. on Thursday:

Apple and Microsoft shrugged off earlier losses, aiding the Dow Jones Industrial Average.

The tech-heavy Nasdaq ended higher, though was in the red for most of the day.

Hilary Kramer, chief investment officer at Kramer Capital Research, noted that tech stocks are still struggling even as borrowing costs as implied by the 10-year Treasury yield have fallen below 1.6% after hitting 14-months highs above 1.7% earlier this year.

Nasdaq “valuations are completely out of whack with where we are with Main Street,” she told Insider on Thursday. “We have help-wanted signs everywhere from restaurants to mechanics shops … and what’s going to happen is people are going to stop spending.” She added that these pressures are being pulled forward to put the squeeze on tech stocks.

Around the markets, Etsy shares tumbled to five-month lows after the online marketplace said it expects quarterly sales on its platform to slow.

Peloton’s 15% sell-off following a treadmill recall has created a buying opportunity, according to Credit Suisse.

Gold rose 1.6% to $1,814.07 per ounce. Long-dated US treasury yields fell, with the 10-year yield at 1.561%.

Oil prices declined. West Texas Intermediate crude fell 1.2% to $64.83 per barrel. Brent crude, oil’s international benchmark, lost 1.2% to $68.11 per barrel.

Bitcoin fell 3% to $55,475.

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These 5 stocks have helped drive a 32% decline in Cathie Wood’s Ark Invest flagship ETF

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The reflation trade out of growth and into cyclicals in anticipation of a reopened economy has damaged the flagship ETF managed by Cathie Wood’s Ark Invest.

The ARK Disruptive Innovation ETF has declined 32% since its peak at $160 in mid-February. The ETF is down 13% year-to-date, a flip from its 2020 return of nearly 150%.

Despite the negative returns for the ETF in 2021, investors are not backing down from investing alongside Wood, as $6.7 billion has flowed into the ETF year-to-date, according to fund flow data from ETF.com. The ARK ETF still has more than $21 billion in assets under management.

Detailed below are the five stocks that helped drive the decline in the tech-focused ETF managed by Cathie Wood, based on Thursday afternoon prices.

5. Square

Ticker: SQ
Decline from peak: 20%
% of ARKK ETF: 4.66%

sq charrrrt.JPG

4. Tesla

Ticker: TSLA
Decline from peak: 26%
% of ARKK ETF: 10.77%

tsla charrrt.JPG

3. Shopify

Ticker: SHOP
Decline from peak: 28%
% of ARKK ETF: 3.66%

shopifyf.JPG

2. Roku:

Ticker:ROKU
Decline from peak: 42%
% of ARKK ETF: 4.79%

roku charrrt.JPG

1. Teladoc

Ticker: TDOC
Decline from peak: 50%
% of ARKK ETF: 6.37%

teladocc.JPG
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Billionaire investor Leon Cooperman blasted stimulus efforts, flagged a bond bubble, and warned of a brutal market crash in an interview this week. Here are the 11 best quotes.

Leon Cooperman
Leon Cooperman.

  • Leon Cooperman criticized the federal government for pumping up the US economy.
  • The billionaire investor said low interest rates and stimulus are pushing investors to take risks.
  • The Omega Advisors boss warned of a brutal market crash once conditions worsen.
  • See more stories on Insider’s business page.

Leon Cooperman blasted the federal government for juicing a booming economy, predicted rising inflation will prompt an interest-rate hike next year, and warned markets will nosedive once sentiment shifts during a Bloomberg Surveillance interview this week.

The billionaire investor and Omega Advisors chief also blamed the Federal Reserve for investors taking greater risks, highlighted a bubble in the bond market, and questioned the need for greater regulation of family offices.

Here are Cooperman’s 11 best quotes from the interview, lightly edited and condensed for clarity:

1. “It’s the advance of greed basically. The fact that the industry would get into the same predicament again is kinda surprising. The more things change, the more they remain the same.” – comparing the recent collapse of Archegos Capital, which sparked over $10 billion of losses for the banks that lent it money, to Long-Term Capital Management blowing up in the late 1990s.

2. “I’m a retired money manager living on investment income. I run my own money. Why they have the right to regulate me is beyond my wildest dreams.” – questioning the SEC’s plans to increase oversight of family offices.

3. “I describe myself as a fully invested bear.” – Cooperman explained he doesn’t currently see the factors that cause bear markets such as accelerating inflation, a hostile Federal Reserve, and recession fears, but he expects the backdrop to change.

4. “The biggest plus out there is the Fed has created an environment where there’s an absence of alternatives.” – arguing that near-zero interest rates have pushed investors into riskier assets such as high-yield bonds, stocks, and cryptocurrencies.

5. “We are borrowing from the future. Interest rates shouldn’t be where they are, and we should not be injecting so much fiscal stimulus when the economy is growing off the charts.”

6. “The market’s gonna be surprised because the Fed will raise rates sometime in 2022. They’ll be forced to by inflation.”

7. “Everything I look at would suggest caution, intermediate to long term, would be the rule of the day.”

8. “On NFTs, bitcoin, stuff like that – I’m too old. I don’t understand that stuff, it’s crazy to me, it makes no sense. I’m a meat-and-potatoes guy, a stocks guy.”

9. “The bubble is not so much the stock market, the bubble is the bond market.”

10. “They’re not cheap stocks, but they’re not expensive stocks. Nothing is expensive if interest rates stay here.” – commenting on “big tech” stocks and echoing Warren Buffett.

11. “When this market has a reason to go down, it’s gonna go down so fast your head’s gonna spin.”

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Bill Gates transferred stock worth about $2.4 billion to Melinda Gates on the same day they announced their divorce

Bill Gates Melinda
Melinda and Bill Gates.

  • Tech billionaire Bill Gates transferred stock in two of Mexico’s largest companies to Melinda Gates.
  • He also split up stakes in a Canadian railway company and America’s largest automotive retailer.
  • They hadn’t signed a pre-nup, but are splitting property and debts under a “separation contract.”
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Bill Gates moved stock worth nearly $2.4 billion to Melinda Gates on the same day they announced their marriage had ended.

Cascade Investment, a holding company managed by the Microsoft cofounder, transferred stakes in the biggest owner of US car dealerships, a Coca-Cola bottler, a Mexican broadcaster, and a railway company to her control, according to SEC filings.

She now holds a 4.7% stake in Coca-Cola Femsa, worth $121 million, and a 6.7% stake in Grupo Televisa, worth $386 million. That places her among the largest shareholders in two of Mexico’s biggest companies.

Bill Gates also moved some of his holdings in Canada National Railway and AutoNation to his former wife, filings showed. His 1.9% stake in Canada’s longest railway system was valued at $1.5 billion, while his 3.7% stake in the automotive retailer was worth $307 million as of Wednesday’s closing price.

Cascade continues to hold about 12.3% of the railway company and 19.2% of AutoNation, but filings showed it’s no longer listed as an owner for the two Mexican companies.

Bill Gates has either sold or donated most of his stake in Microsoft, which he ran for about 34 years. He currently owns 1% of the tech company and is worth an estimated $144 billion, according to Bloomberg.

The billionaire philanthropists have spent much of their $130 billion fortune on charity through the Bill and Melinda Gates Foundation. The couple never signed a prenuptial agreement, but will be splitting their property and debts under terms laid out in a “separation contract.” In their divorce filings, Melinda Gates did not seek spousal support.

In documents filed to the court, she called her marriage to the billionaire cofounder “irretrievably broken.”

Their divorce comes two years after another tech billionaire couple, Amazon boss Jeff Bezos and MacKenzie Scott, announced their separation in 2019. Two lawyers who worked on their divorce case also represented the Gates.

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JPMorgan’s quant guru says stock investors are vulnerable to an inflation shock – and recommends these 5 strategies to prepare

Marko Kolanovic Top 100
  • Investors who’ve spent the last decade profiting from deflationary trades are vulnerable to an “inflation shock,” said Marko Kolanovic.
  • He recommends investors who want to reposition their portfolios for more persistent inflation reallocate bonds to commodities and stocks.
  • The JPMorgan chief global markets strategist also said to buy value names.
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Investors who have spent the last few years profiting from deflationary trends may need to reposition to avoid an “inflation shock” to their portfolios, said JPMorgan’s Marko Kolanovic.

The quant-driven chief global markets strategist said in a Wednesday note that with the end of the pandemic in sight, global growth, bond yields, and inflation are picking up. At the same time, it appears federal officials will continue easy monetary and fiscal policies. In just 2021, the new US administration proposed $6 trillion of new stimulus measures, he said.

Against that backdrop, investors who have made money from deflationary trades are vulnerable to inflation risks, Kolanovic said.

“For over a decade, only deflationary (long duration) trades were working, and many of today’s investment managers have never experienced a rise in yields, commodities, value stocks, or inflation in any meaningful way,” Kolanovic said.

The Federal Reserve has argued that any near term inflationary pressures will only be temporary, though Kolanovic said the question that matters most for investors now is whether they’ll prepare for a more serious rise in inflation.

“Given the still high unemployment, and a decade of inflation undershoot, central banks will likely tolerate higher inflation and see it as temporary,” he said. “The question that matters the most is if asset managers will make a significant change in allocations to express an increased probability of a more persistent inflation.”

To reposition a portfolio for the risk of more persistent inflation, he recommends investors shorten duration and reallocate from bonds to commodities and stocks. Although commodity prices have been on a tear as of late, Kolanovic said they’re cheap in a historical context: they’re the only major asset class that has declined in absolute terms over the past decade. He added that commodity indices, such as the S&P GSCI, are “perhaps the most direct inflation hedge.”

Within stocks, the strategist recommends investors buy value names and short low volatility style. Finally he said investors should be cautious ESG factors.

“Investors should be cognizant that by embracing ESG they introduced additional short inflation exposure into portfolios (e.g., via long tech and short energy exposure),” Kolanovic added.

Read more: Dave Bujnowski beat 99% of his peers to return 125% last year. The Baillie Gifford investor shares 5 stocks set to benefit from the end of the pandemic and a hyperconnected economy.

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Consumer confidence in stock prices suggest there’s more time left for the bull market, NDR says

trader nyse pray
  • Consumer confidence in the stock market has not reached excessive levels, suggesting there is more time left for the current bull market, Ned Davis Research said in a Wednesday note.
  • Consumers’ view on bonds is bearish, which is a hopeful sign for the economy going forward, NDR said.
  • Despite the bullish signals from tamed sentiment toward stocks, record high margin debt serves as a risk for the market.
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Many sentiment indicators have shown an excessive amount of optimism towards the stock market in recent weeks, but consumer confidence readings tell a different story, according to a Wednesday note from Ned Davis Research.

US consumers are still skeptical about stocks, according to a survey by the Conference Board. Expectations for a decrease in stock prices over the next 12 months has fallen to a neutral level after being elevated amid the COVID-19 pandemic. The indicator is still far away from reaching excessive levels that would trigger a contrarian sell signal.

This indicator is contrarian in that stocks perform well over the next 12 months when consumers are overwhelmingly bearish on stock prices, and perform poorly when consumer are overwhelmingly bullish on stock prices.

A neutral reading towards stocks for this consumer confidence survey “suggests that the bulls could still have some time” for the rally in stocks to continue, according to NDR.

Another bullish indicator is US consumers’ confidence towards bonds, which has reached a pessimistic level.

“When people get this negative on bonds historically, a lot of the bad news (good news for nominal economic growth) is starting to get priced in,” NDR explained.

But one high-risk warning that should be flashing for stock market investors is record levels of margin debt. While rising margin debt often coincides with rising stock prices, a fast rate of change over the past year has hit a level where stocks have often struggled, NDR warned.

ndrr chart.JPG
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US and European stocks reverse losses as Yellen signals inflation won’t hurt recovery and commodities rally

wall street new york stock exchange

US stocks rose slightly on Wednesday after Treasury Secretary Janet Yellen said she doesn’t expect inflation to be a problem, underplaying previous comments that it may be necessary to raise interest rates to prevent economic overheating.

Futures on the Dow Jones, S&P 500, and Nasdaq rose 0.3%, suggesting a higher start to trading at the market open.

Yellen’s remarks the previous day were likely about longer-term rates, rather than breaking historic convention and commenting on monetary policy, Deutsche Bank strategists said. She also seemed to project the Fed has the necessary tools to address inflation if it were to occur.

But her initial comments prompted a sell-off in tech shares and sent longer-dated Treasury yields higher.

“So it seems like a small matter-of-fact statement has been magnified around financial markets, which just shows how sensitive we all are to rates and inflation,” Deutsche’s strategists said.

A decline in large-cap Wall Street tech darlings led the Nasdaq 1.6% lower at Tuesday’s close as investors dumped their shares on concerns of rising interest rates.

With the S&P 500 around 1% away from record highs, UBS Global Wealth Management says plenty of good news is priced into the market, suggesting stocks are potentially vulnerable to disappointments.

Chief investment officer Mark Haefele said such worries can continue to be seen as a source of volatility rather than developments that are likely to end the equity rally.

“Investors can brace for future bouts of volatility through diversification, and use market swings as an opportunity to build long-term exposure,” he said. “We believe the backdrop of accelerating growth and continuing policy support means that markets can advance further.”

Investors in Europe initially took their cue from the weakness across the US market, but those losses reversed with another busy start to corporate earnings and a burst higher in the commodities complex. Results from car manufacturer Stellantis, insulin-maker Novo Nordisk, and Danish shipping company AP Moller-Maersk are due.

Surging commodity prices pushed up mining stocks in the region, as recovery sentiment lifted. UK mining stocks including Rio Tinto, BHP, and Anglo American each rose about 2% alongside copper prices rising past $10,000 a tonne for the first time in years.

London’s FTSE 100 rose 1%, the Euro Stoxx 50 rose 1.3%, and Frankfurt’s DAX gained 1.4%.

Asian shares were largely muted as markets in China, Japan, and South Korea are still closed for public holidays. Hong Kong’s Hang Seng fell 0.5%, led by weakness in the tech sector.

Oil prices climbed against the backdrop of easing lockdowns in the US and Europe. Brent crude futures rose 3%, to $69.70 per barrel, and West Texas Intermediate rose 1.1%, to $66.45 per barrel.

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Precipio extends 2-day gain to 404% following launch of the company’s COVID-19 test on Amazon

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  • Precipio shares jumped by more than 400% during a rally that extended for a second day on Tuesday.
  • The surge came after the company’s COVID-19 antibody test started selling on Amazon.
  • The 20-minute test was the first of its kind in the US to win FDA approval for emergency use.
  • See more stories on Insider’s business page.

Precipio stock rocketed higher for a second session on Tuesday, with a fivefold surge in the price ignited after the specialty diagnostics company launched its COVID-19 antibody test on Amazon.

The company said it holds the exclusive rights to distribute the 20-minute test on Amazon’s platform. Precipio said the test, which covers two types of antibodies, was visible for sale on the retailing giant’s website and app.

Precipio shares surged to an intraday high of $9.18 Tuesday, a gain of 404% from Monday’s opening price of $1.82.

The company said the test can currently only be purchased by “qualified” medical point-of-care providers such as physicians and medical facilities.

The test, which is manufactured by Palo Alto, California-based Nirmidas Biotech, was the first one based in the US to receive emergency use authorization by the Food and Drug Administration for point-of-care use, Precipio said.

“We look forward to working with other retail outlets, as well as with Nirmidas to advance this product into at-home use, following the receipt of appropriate FDA authorization,” said Precipio.

Amazon shares were down by 3% as part of a wider selloff on Tuesday.

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US markets dip after a lag in high-flying tech stocks, while European stocks trade higher on reopening confidence

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US markets edged lower on Tuesday after mega-cap technology stocks dropped despite largely upbeat quarterly results over the past week.

Futures on the Dow Jones, S&P 500, and Nasdaq fell between 0.1% and 0.3%, suggesting a weaker start to trade at the opening bell later.

Declines in shares of Amazon, Alphabet, Facebook, and Microsoft have weighed on the broader market. Chipmakers have also been under pressure, as the current semiconductor shortage is having tremendous impacts on lead times and pricing, according to Deutsche Bank strategists.

“There appears to be a general inflation of prices across most, if not all, supply lines,” they said. “This dovetails with what many companies are reporting during this earnings season, and has caused more than a few to lower production guidance for 2021, even as consumer demand continues to rebound with the overall economy.”

But with results in from a majority of the S&P 500 names, 85% of companies have beaten expectations.

UBS chief investment officer Mark Haefele said investors should be careful to avoid over-allocating to mega-cap tech companies in their portfolios. “In an environment of accelerating growth, we continue to prefer cyclical and value sectors such as financials and energy, while positioning for long-term structural growth in industries which could provide ‘The Next Big Thing’,” he said.

The US dollar rallied after Federal Reserve Chair Jerome Powell said the US economic outlook has “clearly brightened,” but has been slower for those in lower-paid jobs. In terms of rising house prices, Powell cited a sharp increase in demand fueled by low mortgage rates and fiscal stimulus. He expects “it is going to be a tight housing market for some time now because demand is just very, very high.”

Jerome Powell
Fed Chair Jerome Powell.

Across the pond, the European Commission is proposing a travel plan that would replace the current blanket ban for non-essential travel to the region that has been in place for about a year, according to the Guardian. People who have been fully vaccinated from countries with low infection rates could be allowed to travel to the EU by the start of June under a proposed vaccine passport system.

In the UK, a string of local and regional elections will be taking place on Thursday after being delayed last year due to the pandemic. The Bank of England will announce its latest monetary policy decision the same day.

“In terms of when they might begin to taper their Quantitative Easing operations, (economists) think it’s a close call between May and June, but ultimately the BoE will wait until June,” Deutsche strategists said.

London’s FTSE 100 rose 0.6%, the Euro Stoxx 50 was about flat, and France’s CAC 40 rose 0.2%.

Activity in Asian markets was somewhat muted by holidays in China and Japan on Tuesday. Hong Kong’s Hang Seng was up 0.8%.

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Stock market bullishness is at a 13-year high, but euphoric sentiment also means it may soon be time to sell, Bank of America says

NYSE Trader
  • Bank of America said bullishness in the stock market is the highest in 13 years.
  • But its contrarian Sell Side Indicator is very close to tilting into an area that will signal to investors that it’s time to sell.
  • BofA said it still prefers cyclical stocks.
  • See more stories on Insider’s business page.

Investors are the most enthusiastic about stocks since the global financial crisis more than 10 years ago but the market is edging closer to indicating that it’s time to sell, Bank of America said Monday.

Wall Street’s bullishness on stocks is a reliable contrarian indicator, BofA said in a note showing that its Sell Side Indicator rose to a 13-year high of 59.8% in April from 59.4% in March. The indicator is based on the average recommended equity allocation of Wall Street strategists.

The indicator is also 50 basis points away – at 60.3% – from the contrarian ‘sell’ threshold.

“Increasingly euphoric sentiment is a driver of our more cautious outlook as we believe that vaccine deployment, economic reopening, stimulus, etc. are largely priced in,” said equity strategists led by Savita Subramanian. “We have not seen a 5% pullback in six months … nor have we experienced a 10% correction in 14 months.”

Pullbacks in stocks occur on average 3 times per year and corrections historically are a once-per-year phenomenon, BofA said. A correction is widely considered a decline of 10% or more in an index or an asset from its most recent high.

The signal to sell stocks is at its closest since May 2007, after which the S&P 500 dropped by 7% in the subsequent 12 months, said BofA. The indicator is currently pointing to 12-month returns of 6%, a “much weaker outlook” compared with an average 12-month forecast of 14% since the end of the global financial crisis.

Bullishness among investors was on display through Wall Street’s three widely watched indexes which in April hit record highs. April proved to be a good month for US equities, with the S&P 500 index climbing by 5.2% and the Nasdaq Composite gaining 5.4%. The Dow Jones Industrial Average rose 2.7% and crossed above 34,000 for the first time. Investors pushed stocks up as corporate earnings have come in ahead of analyst expectations and more economic data point to further recovery in the world’s largest economy from the COVID-19 pandemic.

Equity allocations since March 2020 have risen more than 3.5 times faster than they typically do following bear markets, the strategists said. Stocks crashed in March of last year as the coronavirus health crisis accelerated.

“Lofty valuations, juxtaposed against the potential for bad inflation, rising rates, and higher taxes on corporates and consumers. But we are bullish on economic / profits / capex growth, driving our preference for cyclical stocks,” wrote Subramanian.

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