Markets Edge Higher Ahead of Data-Packed Week

Monday, May 3, 2021 4:55 PM | Neal Farmer

Markets got off to a nice start this week with the S&P 500 gaining 0.27% and Dow Jones Industrial Average rising 0.70%. The tech-heavy NASDAQ opened higher as well but fell later in the day, losing 0.48% for the day.

This week is heavy on economic data with the monthly Employment Situation Report scheduled for release on Friday and ADP employment change coming out on Wednesday. Additionally, earnings season continues with many corporations reporting quarterly performance. No one particular sector is dominating earnings reports but big names such as Pfizer (PFE), T-Mobile (TMUS), General Motors (GM), PayPal (PYPL), and others will report this week. Finally, vaccines are continuing to be distributed at a high rate with more than 44% of the U.S. population having already received one dose but the daily number of doses administered has recently been falling to lowest since mid March.

Heavy Economic Data

The ADP Employment Change for the month of April is expected to show the private sector added 810,000 jobs last month. That number would be a significant increase over the last report that showed an increase of 517,000 jobs for March. The estimated increase remains far above January and February of this year which showed a change of nonfarm private sector employment of 174,000 and 117,000 respectively.

The primary focus for investors this week will come Friday when the April jobs report is released at 8:30 a.m. ET. The unemployment rate is expected to drop to 5.8% from 6.0%. Meanwhile, economists are expecting the U.S. to have added approximately 1 million jobs in April, slightly up from the 916,000 added in March. Some analysts are expecting a much larger gain as vaccinations increased significantly and business openings picked up. Average hourly earnings are estimated to remain mostly flat dropping 0.1% just as it did the previous month.

Finally, initial unemployment claims are expected to remain relatively level at 530,000 claims after 553,000 claims were reported the previous week.

Earnings Leftovers

This week is dense with earnings once again but no particular sector or industry is dominating the list. Investors keeping track of vaccination rates may keep a close eye before open on Tuesday when CVS and Pfizer with both expected to report their highest earnings per share in more than two quarters. General Motors  meanwhile is reporting before market open on Wednesday and investors are optimistic after rival Ford (F) significantly outperformed earnings estimates for the first quarter when it reported last week. The insurance industry will then have two leaders report first quarter performance after close Wednesday when MetLife (MET) and Allstate (ALL) release earnings.

Rounding out some of the biggest names to report are T-Mobile and Activision (ATVI) after close on Tuesday, ViacomCBS (VIAC) and Anheuser-Busch InBev (BUD) before the open on Thursday, and McKesson (MCK) after market close Thursday.

Vaccine Progress

More than 147 million people have received at least one dose of the coronavirus vaccine in the United States according to The Washington Post. That number represents 44.4% of the population while 31.8% (105.5 million) are fully vaccinated in the country. That number represents a massive success as vaccine developments are far beyond where most expected to be at this time. In fact, supply has not reached a point where some vaccines are expiring and Pfizer will start exporting U.S.-made doses of the vaccine. Moderna (MRNA) also agreed to provide as many as 500 million doses to the global program Covax where it will work with Gavi, the Vaccine Alliance, to supply 34 million doses in late 2021.

The strong vaccine news comes at a time when the average number of daily doses administered in the U.S. has been falling. The seven-day average for daily doses surpassed 3.3 million in mid April but has since been dropping consistently to now 2.42 million. The drop does coincides with the halting of the use of the Johnson & Johnson (JNJ) vaccine, which has since been lifted, but the daily number of vaccines has continued downward.

A drop in demand partly explains this as adults who wanted the vaccine most have already received it and a larger portion of the remaining population may be hesitant to bethe vaccinated. A drop in the total number of doses delivered daily was expected to happen soon anyway as fewer people actually need the vaccine as more are vaccinated. The downward trend may have come earlier than expected but daily doses remain high and supply is clearly going strong still.

Economic Events this Week

Wednesday

  • 8:15 a.m.- ADP Employment Change
  • 10:30 a.m. - EIA Crude Oil Inventories

Thursday

  • 8:30 a.m. - Initial Claims

Friday

  • 8:30 a.m. - Nonfarm Payrolls
  • 8:30 a.m. - Unemployment Rate
  • 8:30 a.m. - Average Hourly Earnings

Earnings Reports this Week

Tuesday:

Before the bell: CVS, MPC, PFE, SYY, BG, COP, CMI, ETN After the bell: TMUS, PRU, PAA, CTVA, AMCR

Wednesday:

Before the bell: ABC, GM, EXC, PFGC, CNHI, FLEX, CDW, WRK, EMR After the bell: MET, ALL, PYPL, LUMN, LNC, CTSH, RKT, EQH, UBER, FOXA

Thursday:

Before the bell: CAH, MT, BUD, MGA, ARW, VIAC, BDX, TEN, WCC, CORE After the bell: MCK, ET, AIG, RGA, SQ, EOG

Friday:

Before the bell: CI, CVE, LEA, TRP, FLR

Sector and Industry Sentiment

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