[Chart courtesy of MarketWatch.com]

1. Moving the markets

The major indexes, except for the Nasdaq, continued last month’s bullish theme on the first trading day of May by vacillating above their respective unchanged lines, as the Dow led with a 0.70% gain.

With the continual reopening of the economy retailers benefited, also supported by New York Gov Cuomo’s announcement that most capacity restrictions will be lifted across NY, NJ, and CT with 24-hour subway service in NY City to resume later this month.

Traders now are worried about the truism of the adage “sell in May and go away,” which CNBC explained like this:

Data going back to 1928 shows that the May-October period has the lowest average and median returns of any six-month period of the year with the S&P 500 up 66% of the time on an average return of 2.2%, according to Bank of America.

However, right now another busy earnings week is on deck with much attention being given to Friday’s widely watched and eagerly expected jobs report.

The US Dollar tanked, while 10-year bond yield followed suit by breaking back below its 1.60% level, both of which are the ideal combination to push Gold higher. Today was no exception, and the precious metal rallied 1.39% stopping just short of its $1,800 level.

With inflationary fears rising, it came as no surprise that the Commodity index surged adding some 1.12% in the process and continuing its ascent to higher prices.

ZeroHedge, in its infinite and spot on wisdom proposed that we need a bigger global balance sheet, as Bloomberg charts here, or dire consequences, like a slipping market, may be on the horizon.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

The S&P 500 managed to find some footing, after a mid-day gag caused by surging bond yields, and scored another record close, powered by blowout earnings from the tech sector, namely Apple and Facebook. Despite their solid performances, the Nasdaq lagged the other two major indexes for the day by a wide margin.

On the economic front, we learned that 1^st quarter GDP was reported at “only 6.4%,” which missed expectations of 6.6% but, is an improvement to the Q4 number of 4.3% The question that ZeroHedge posted “Is this all the growth that $2 trillion in stimulus can buy?” remains a valid one, and it casts doubt on the effects of future reckless money printing in terms what it can really accomplish.

Pending Home Sales disappointed due to low inventory, while last week’s Initial Jobless Claims totaled 553k, just a tad worse than the 528k estimated by Dow Jones.

Crowd favorites Uber and Lyft were manhandled today and got battered after Biden’s plan to make gig workers employees. Bond yields rode the roller coaster by popping and dropping as Bloomberg shows in this chart. The US Dollar roundtripped as well, sold off into the close but managed to eke out a gain. Gold followed suit but ended the session flat.  

While uncertainty played havoc with the markets intraday, in the end, the bulls managed to keep the upper hand when it counted most, namely at the close.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

While the futures were flat, the regular session opened with a bounce for the S&P 500, while the Dow and Nasdaq hovered below their respective unchanged lines. In the end, all three indexes meandered aimlessly all day and ended slightly in the red.

The much-expected Fed announcement was a nothing burger with no changes in policy neither in terms of tapering bond purchases nor any potential hike in interest rates. The statement was dovish with optimistic soundbites being offset by downbeat ones, as ZH posted:

…economic activity and employment have strengthened.

Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.

The sectors most adversely affected by the pandemic remain weak but have shown improvement.

Yet:

The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.

And most importantly, “inflation has risen, largely reflecting transitory factors.”

In other words, there was no meat on that bone, neither for the bulls nor for the bears, so we ended up going nowhere.

The US Dollar slumped to two-month lows, according to ZH, with bond yields heading south as well, a combination which benefited Gold, but only moderately.  

The Nasdaq showed no bullishness either, despite Google parent Alphabet reporting better-than-expected earnings after the bell on Tuesday with its shares rallying 3%. That was offset by Microsoft topping analysts’ estimates as well, yet the stock dipped 2.8%. Go figure…

All eyes are now on Joe Biden’s $1.8 trillion plan in new spending as well as tax credits for families in need. Higher income tax rates and an increase in capital gains taxes will make tonight’s showing one to remember.