Markets Down Again, Off Session Lows; Plus EA Earnings

·3-min read

For the second full trading day in a row, all major indexes closed in the red to varying degrees. The Nasdaq, which had gotten hit in the most recent rotation out of growth tech names into cyclicals on the Dow and S&P 500, had been down 2.2% intra-day, but stormed back to close down just 0.09%.

The Dow, which had been down more than 500 points at one stage, closed down 1.36% or 472 points. The S&P 500 fell 0.87%, and the Russell 2000 was -0.26%.

For the Dow, this was the worst trading day since the last week of February. Perhaps investors, who are not climbing immediately back into tech stocks, are trying to dry up some powder before the next catalyst — an infrastructure bill from Capitol Hill, or some similarly big deal economically. We are currently one the back end of calendar Q1 earnings season, so most of these market-movers — save, perhaps, some of the bigger names in Retail, which has yet to report — are going dormant.

Earlier in the day, the U.S. saw a record number of Job Openings (from the JOLTS Survey): 8.1 million. These are most heavily in the Travel and Leisure & Hospitality sectors, which are areas that were truly decimated during the “shelter in place” time period of the pandemic. This 8.1 million headline outpaced the 7.5 million expected, which was also the headline figure for March Job Openings reported a month ago.

Tomorrow morning, new Consumer Price Index (CPI) numbers for April are expected, with a thinning expectation of +0.2% from a +0.6% actual posted a month ago. “Core” CPI, subtracting volatile near-term pricing from food and energy,  is expected to come in at +0.3%, the same as last month. Producer Price Index (PPI) numbers are expected Thursday morning, and look to come in a bit cooler: +0.3% expected, +0.1% core.

Electronic Arts EA has made make most of its late-trading losses already, in which the stock tanked initially around 5% on a big bottom-line miss but a $90 billion beat on the top line to $1.49 billion in the quarter. Revenue estimates for the next quarter and full year were both raised, and net booking growth is expected to average high-teens upside through fiscal 2022.

Perhaps this cold week in market trading is giving some more attractive valuations to some of your favorite stocks you haven’t yet bought due to exorbitantly high prices. Keep in mind many of these companies are already at lofty historical levels, even considering this most recent sell-off. It is this reality in day-to-day trading activity that most likely is keeping bidders cautious — even when companies produce big “beats & raises” as Q1 earnings season continues.

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