Before The Bell: S&P 500

S&P 500 Down Before The Bell 3-30-2021

The S&P 500 and markets are looking bearish this morning because of increasing fears of inflation, bond yields, and rebalancing of portfolios. The Archegos Capital blowup will remain a focal point, though the mixed markets on Monday suggested little fear of any systemic effects.

However, the increasing bond yields could trigger money managers to move out of equities and into bonds because the dividends would be less than bonds. We believe that this could start happening with a 10-Year yield of 1.75%.

Yesterday the Dow rallied 0.3% to a new record peak at 33,171, garnering support from Boeing after a big order for the 737 MAX from Southwest Air, highlighting reopening trades on the widening distribution of vaccines.

The NASDAQ, however, slipped -0.6% and the S&P 500 dipped -0.09% with weakness in financials and energy. In Treasuries, yields rose despite the concerns over Archegos mess. The 10-year was up 3.7 bps to 1.71% with the 30-year 3.5 bps higher at 2.41%.

S&P F3,945.75-13.15-0.33%
NASDAQ F12,848.00-96.5-0.75%
Crude Oil60.51-1.05-1.71%
Bitcoin USD59,0661,8893.30%
U.S. 10yr1.7630.0475

Key Market Drivers:

  • U.S. calendar includes consumer confidence, S&P/Case-Shiller home price index
  • Canada calendar empty again today; Jan GDP due on Wednesday
  • The dollar rallied to fresh highs alongside a spike in Treasury yields
  • EGBs have sold off with Treasuries, European stocks broadly higher
  • German and Spanish inflation data higher than anticipated
  • ESI economic confidence jumped to pre-pandemic levels
  • Swiss KOF economic indicator at highest levels since summer 2010
  • Macron, Johnson, Merkel among world leaders calling for a pandemic treaty
  • Fed’s Waller: we are “a long ways from raising rates at this point”

Trading is likely to remain cautious. Data will be monitored, but probably won’t be market moving given attention on Archegos, the pandemic dynamics, and Friday’s jobs report.

Today’s slate has consumer confidence, expected to improve to 96.0 from 91.3 given the jump seen last week in the final reading from the University of Michigan survey. January S&P/Case-Shiller home price index should rise to 242.5 from 240.8. The January FHFA home price index is also due, along with weekly chain store sales.

For Fedspeak, VC Quarles and Williams are on deck. The earnings calendar continues to slow, though reports today are due from lululemon, McCormick, BioNTech, and FactSet.

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