Markets big news in stride early this week on the way to posting gains that left all three indices at new closing highs.
The FDA and CDC recommend a pause Tuesday in the use of the Johnson & Johnson (JNJ) coronavirus vaccine. JNJ shares dropped following the news while vaccine producers Moderna (MRNA) and Pfizer (PFE) both made significant gains.
Additionally, this week marked the start of earnings season with many of the largest financial institutions in the world reporting 2021 first quarter earnings. Most banks reported better than expected earnings and revenue but some still experienced losses following earnings reports after discussing the impact of the Archegos Capital Management collapse. Finally, investors took in new inflation data, retail sales growth, and data on unemployment claims this week.
J&J Vaccine Pause
The FDA and CDC officially recommended pausing the use of the Johnson & Johnson vaccine early this week after reports of severe blood clots in several patients. The side effects in a few patients who received the vaccine led to federal vaccination sites discontinuing the use of the coronavirus vaccine and officials recommending the pause of its use to states, many of which complied. The development led to concern for the 6.8 million Americans who have already received the vaccine but Surgeon General Vivek Murthy sent a message on Friday afternoon reassuring people that the overwhelming likelihood is that they will be just fine. There have only been six confirmed cases of blood clots in patients so far, including one death.Shares of JNJ dropped Tuesday following the news, but the market continued its upward trend this week despite the vaccine being paused for the time being. In fact, even JNJ has already recovered with its share price up from where it closed last week. MRNA and PFE shares jumped Tuesday morning in response to the development and only continued to rise over the course of the week.
Banks Beat Earnings
Earnings season started this week with financial institutions leading the way as JP Morgan (JPM), Goldman Sachs (GS), Wells Fargo (WFC), Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), and others reported this week. It was a great start for these firms as all surpassed earnings and revenue estimates. As a result, most of these stocks rose following the quarterly report, however, some did fall in part due to updated guidance and impact of the Archegos Capital Management fallout. Morgan Stanley in particular saw its share price fall nearly 3% Friday despite surpassing estimates before market open as the bank reported a $911 million loss due to Archegos failing to meet its margin call.In addition to financial institutions, Delta Air Lines (DAL) was the first airline to report first quarter earnings this season. Delta missed on earnings per share (EPS) estimates of -$2.75 when the company reported an EPS of -$3.55, however, it did just beat out revenue expectations. Despite the miss, DAL stock opened higher Thursday after the report but quickly gave that and more back to end the day down 2.7%.
Strong Economic Data
Concerns rose over inflation last week when the Producer Price Index (PPI) saw a 1.0% rise last month which was far above the 0.5% expected growth. The Consumer Price Index (CPI) quelled some of those fears Tuesday when it showed only a 0.6% increase compared to the estimated 0.5% increase.Additional data later in the week sent more bullish signs to investors. Retail sales rose 9.8% in the month of March, far above analyst estimates of a 6.0% increase. Lastly, initial unemployment claims dropped from 769,000 to 576,000 last week, analysts were expecting a much smaller decline to 705,000.
All that said, the S&P 500 rose 1.37%, the Dow Jones Industrial Average gained 1.18%, and the NASDAQ rose 1.09% for the week.