1. Moving the markets

After an early rally, the major indexes spent the remainder of the session struggling to maintain their gains but were not able to with prices slipping and the Nasdaq dipping into the red. However, the Dow and S&P 500 were able to advance modestly.

Better-than-expected Initial Jobless Claims provided the ammunition for the early surge. The Labor Department reported that these claims had tumbled to their lowest since the lockdown began, as “only” 406k Americans filed vs. 425k expected.

But, as ZeroHedge pointed out, that is still double the pre-pandemic norms and, despite this improvement, almost 16 million Americans area still on some form of government dole.

As news of Biden’s enormous budget hit the wires, bond yields spiked and stocks started to retreat, except Small Caps, which remained solidly in the green. So did the value ETF RPV, which had a strong showing of +1.22%, thereby clearly outperforming the “growth” sector.

The US Dollar index rode the rollercoaster and ended just about unchanged, while the Gold ETF GLD managed to eke out a tiny gain in the face of rising bond yields.

For sure, we saw a slowdown in trading and volatility ahead of the long Memorial Day weekend. I expect more of that tomorrow with traders’ enthusiasm to bid up stocks ahead of a Holiday not being their priority number one.  

1. Moving the markets

Despite an early bounce, much of the gains were given back during the session with only the Nasdaq staying solidly in the green, while the other two major indexes clung to their respective unchanged lines.

The theme remained the same as those stocks, which are closely connected to the economic reopening, benefitted the most. That helped the tech sector and especially Small Caps to gain some footing, after the latter had been sliding ever since making an ATH the middle of February.  

A positive outlook about the economy continues to be the center of discussion, with CNBC adding:

The optimism on the economy comes as U.S. average daily Covid cases fall below 25,000 and as nearly half the U.S. population has received at least one vaccination dose.

Bond yields went mostly sideways but edged a tad higher into the close, which was followed by the US Dollar index finally finding a reason to rally. That combination took the starch out of an early surge in Gold, with the precious metal surrendering its $1,900 level by a small margin.

It was a session where not much was lost and not much was gained. To me, it seems like another driver will be needed to push the major indexes higher.  

1. Moving the markets

Right after the opening bell, the bulls took charge, after having lost the momentum battle last week, with the major indexes climbing solidly led by the embattled tech sector. Positive news about the continued economic reopening provided the ammunition for the Nasdaq to advance solidly after the recent spanking.

Throughout the session, there was no hesitancy as to market direction with minor pullbacks being quickly bought, as this week got off to a good start. I guess traders were re-thinking the Fed’s hawkish FOMC minutes from last week and decided that “buying the dip” was the way to go, a mentality that has provided support throughout this year and prevented corrections from becoming more serious.

So far, only the Dow is on track to score a gain for May, while the S&P 500 may snap its three-month winning streak. The Nasdaq, which is still down some 3% for the month, may finally break its 6-month winning streak. But there are still four trading days left…

With the US Dollar Index down, and 10-year bond yield retreating, Gold was the beneficiary again by gaining 0.33%.

With tech taking the lead for the day, the S&P 500 (SPY) outperformed its “value” cousin RPV by a good spread, yet on a YTD basis, the latter is ahead by a huge margin, namely +31% vs. 12.5%.