Upbeat Earnings, Economic Data Boost Stocks…..

U.S. equities finished solidly higher following a host of positive earnings reports from Bank of America, PepsiCo, Dow member UnitedHealth Group, and Citigroup, as well as upbeat economic data. Retail sales rebounded by a larger-than-expected amount, jobless claims posted a sizable decline to breach below the 600,000 mark, and manufacturing output in the Philadelphia and New York Regions showed continued expansion. Treasuries gained ground despite the data that also continued to show input pricing pressures remain robust, fostering a downside moves in yields and likely overshadowing some of the upbeat results out of the banking sector. Energy issues also lagged as crude oil prices were mixed to little changed despite the strong economic data. The U.S. dollar was nearly flat and gold was sharply higher. Europe finished mixed amid the sluggishness in Financials and Energy, while markets in Asia also diverged.

The Dow Jones Industrial Average rose 305 points (0.9%) to 34,036, the S&P 500 Index increased 46 points (1.1%) to 4,170, and the Nasdaq Composite was up 181 points (1.3%) at 14,039. In moderate volume, 849 million shares were traded on the NYSE and 4.3 billion shares changed hands on the Nasdaq. WTI crude oil nudged $0.31 higher to $63.46 per barrel. Elsewhere, the Bloomberg gold spot price was $28.09 higher at $1,764.52 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was little changed to 91.65.

Retail sales jump and jobless claims decelerate sharply to kick off heavy economic day…..

Advance retail sales for March rose 9.8% month-over-month (m/m), well above the Bloomberg consensus forecast of a 5.8% gain and following February’s favorably adjusted 2.7% drop. Last month’s sales ex-autos rose 8.4% m/m, compared to expectations of a 5.0% increase and February’s figure was positively revised to a 2.5% decline. Sales ex-autos and gas were up 8.2% m/m, compared to estimates of a 6.4% rise, and February’s reading was adjusted higher to a 3.1% decrease. The control group, a figure used to calculate GDP, advanced 6.9% m/m, versus projections of a 7.2% jump and February’s favorably adjusted 3.4% decline.

Weekly initial jobless claims came in at a level of 576,000 for the week ended April 10, noticeably south of estimates of 700,000, and compared to the prior week’s upwardly revised 769,000 level. The four-week moving average fell by 47,250 to 683,000, and continuing claims for the week ended April 3 rose by 4,000 to 3,731,000, north of estimates of 3,700,000. The four-week moving average of continuing claims fell by 98,000 to 3,763,000.

The Philly Fed Manufacturing Business Outlook Index unexpectedly moved further into expansion territory (a reading above zero) for April. The index rose to 50.2 versus estimates of a decrease to 41.5 from March’s downwardly revised 44.5 level. Growth in new orders decelerated but remains comfortably in expansion territory and employment growth accelerated, while prices paid remained sharply above zero despite a decline.

The Empire Manufacturing Index, a measure of activity in the New York region, showed growth accelerated more than expected, with the index rising to 26.3 in April from 17.4 in March, and compared to forecasts of a rise to 20.0. A reading above zero denotes growth. The report marks the tenth-straight month of expansion and the fastest pace of business activity since 2017, as new orders jumped and employment expanded at a faster pace, though prices paid continued to climb, hitting 74.7.

The Federal Reserve’s industrial production rose 1.4% m/m in March, below estimates of a 2.5% gain, and versus February’s downwardly revised 2.6% decrease. Manufacturing and mining output both rose solidly, but utilities production dropped. Capacity utilization increased to 74.4% versus forecasts calling for a rise to 75.6% from the prior month’s downwardly revised 73.4% rate. Capacity utilization is 5.2 percentage points below its long-run average.

The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in April ticked higher to 83 to match estimates from March’s 82 reading. A level north of 50 depicts positive conditions.

Business inventories rose 0.5% m/m in February, matching forecasts and compared to January’s upwardly revised 0.4% gain.

Treasuries were mostly higher despite the data, as the yield on the 2-year note little changed at 0.16%, while the yields on the 10-year note and the 30-year bond declined 8 bps to 1.55% and 2.23%, respectively.

©2021 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.