May 6, 2021

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The S&P 500 closes flat near a record high ahead of Big Tech’s earnings

The S&P 500 closes flat near a record high ahead of Big Tech's earnings

The S&P 500 index closed little changed near its record high on Tuesday as investors braced themselves for a large amount of tech gains.

The broad equity benchmark ended the day less than 0.1% lower at 4,186.72 after hitting a record high in the previous session. The Dow Jones Industrial Average also closed at 33,984.93. The high-tech Nasdaq Composite slipped 0.3% to 14,090.22.

Tesla’s shares were down 4.5% even after the electric automaker posted a record net profit of $ 438 million. Tesla also easily beat Wall Street’s earnings and revenue expectations, driven by bitcoin sales and regulatory credits. Equities have suffered this year, down more than 20% from their all-time high. Although the stock has still increased by over 300% in the past 12 months.

UPS shares rose more than 10% after earnings surpassed Wall Street estimates. The company said first quarter revenue increased 27%.

The first quarter earnings season kicked off this week with major mega-cap tech companies like Alphabet, Microsoft and AMD reporting after Tuesday’s bell. Earnings from Apple and Facebook follow Wednesday after the bell.

“While expectations are high, I believe we will see FANG stock deliver and I think this is the catalyst for continuing the S&P 500’s trajectory to new all-time highs,” said Jeff Kilburg, chief investment officer at Sanctuary Wealth. “This is the main focus of the week.”

So far, with about a third of the S&P 500 reporting numbers, 84% of companies have reported a positive earnings surprise, according to FactSet. However, stock movements were relatively small following good results with the market at record highs with high valuations.

On the data front, house prices in February recorded the largest increase in 15 years, rising 12% year-on-year and from 11.2% in January, according to the S&P CoreLogic Case-based house price index. Shiller.

Meanwhile, consumer confidence rose sharply to a pandemic peak with the Conference Board index leaping to 121.7, the highest since February 2020.

Shares of GameStop rose more than 5% after the game retailer said it sold an additional 3.5 million shares, raising $ 551 million to accelerate the company’s e-commerce transformation.

The S&P 500 Index rose to close with another record on Monday, while the high-tech Nasdaq Composite rose 0.9% to hit its first new record since February. 12.

“Strong measures of breadth suggest that stocks may still have more upside,” said Jeff Buchbinder, equity strategist at LPL Financial. “Although valuations are high, they still appear reasonable when interest rates and inflation are taken into account.”

The Federal Reserve will kick off its two-day policy meeting on Tuesday. The central bank is not expected to take any action, but economists expect it to defend its policy to drive up inflation. The latest CNBC Fed poll sees the central bank stay on hold and keep its ongoing asset purchase program at the same levels for the remainder of 2021, despite growing concerns about an overheating of the economy.

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