It was a mixed market yesterday with the Dow up 0.7%, the S&P 500 up 0.3%, and the Nasdaq retreating 0.5%, down for the third day.  This morning, all the major indices are trading lower.

Yesterday, the ISM Manufacturing for April showed a decline in US manufacturing to 60.7% from March’s 64.7%, coming in well below consensus of 65.3%, but still signaling expansion for 11 consecutive months.  

Despite being lower, the Prices component was 89.6%, the highest read since 2008, and up from March’s 85.9%.  All 18 industries paid higher prices for raw materials. 

Companies and suppliers are having difficulty meeting demand, as there have been shortages and limited availability of parts and materials due to Covid, as well as workers. Commodity prices are rising and issues with transportation impacted all segments.

Month over Month:

• New Orders 64.3% from 68%
• Employment 55% from 59.6%
• Production 62.5% from 68.1%
• Backlog of Orders 68.2% from 67.5%
• Supplier Deliveries 75% from 76.6%
• Inventories 46.5% from 50.8%
• Prices 89.6% from of 85.6%
• New Export Orders 54.9% from 54.5%
• Imports Index 52.2% from 56.7%

The numbers, while playing into the inflation narrative, didn’t really do much to spook the market.  Actually, the 10-year Treasury gave up some ground, down to 1.61%.  

Construction spending in March increased 0.2% from February, significantly lower than the 1.6% estimates.  Private construction was up 0.7% however, public construction declined 1.5%. The report continues to point to the strength in the housing market driven by the move to the suburbs  with a low supply of existing homes available.

Energy was the best performer, as investors focused on the reopening of economies and the optimism surrounding it.  WTI gained 1.5% to $64.49 a barrel.  Some say to expect shortages and increased prices as people hit the roads for vacations this summer.   This morning, WTI is continuing its gain, up $65.5, and is at a 7-week high.

Communications Services, Consumer Discretionary and Technology names were the worst performers and the SOXX, Philly Semiconductor Index, lost 0.7%.

S&P 500 Index	+0.27%
Communication Services XLC		-0.53%
Consumer Discretionary XLY		-0.48%
Consumer Staples XLP	+0.82%
Energy XLE	+2.75%
Financials XLF	+0.50%
Health Care XLV	+1.14%
Industrials XLI	+1.03%
Materials XLB	+1.49%
Real Estate XLRE		-0.54%
Technology XLK		-0.28%
Utilities XLU		-0.02%

Advancers outpaced decliners.  The volume on the Nasdaq was evenly divided.

Market Breadth	NYSE	NASDAQ
Advancing	2,312	2,274
Declining	1,049	1,966
52 Week High	374	204
52 Week Low	18	56
Up Volume	2.78B	2.45B
Down Volume	1.39B	2.45B

On the earnings front, Pfizer (PFE) had a great quarter due in large part to the Covid vaccine.  Shares are fractionally higher in the premarket.   PFE also raised its full year guidance well above expectations.  The FDA is expected to approve its Covid-19 vaccine for those 12 to 15 years of age next week.

• Earnings $0.93, consensus $0.78
• Revenues +44.6% $14.6B, consensus $13.4B
• Guidance:
• FY21: $3.55-3.65, consensus $3.23. Revenues $70.5-72.5B, consensus $60.17B

Other companies reporting:

CVS (CVS)

• EPS $2.04, Consensus $1.72
• Revenues +3.5% at $69.1B; consensus $68.33B
• Guidance:
• FY21: Adjusted EPS of $7.56-$7.68 (prior: $7.39-$7.55), consensus $7.53
• Cash flow from operations guidance range of $12.0 billion to $12.5 billion

Dupont (DD)

• EPS $0.91, Consensus $0.76
• Revenues -24% $3.98B, consensus $3.82
• Guidance:
• Q2: EPS $0.93 -$0.95, consensus $0.89. Revenues $3.98-4.08B, consensus $3.83B

Under Armour (UAA)

• Earnings $0.16, consensus $0.04
• Revenues +40% $1.3B, consensus $1.12B
• Wholesale sales +35% $800M
• N. America sales +32% $806m
• Guidance
• FY21: EPS $0.28-0.30, Consensus $0.19. Prior guidance $0.12-0.14.

Portfolio Approach

Yesterday, we added to Industrials in the Hotline Model Portfolio

The crypto craze is continuing, with Dogecoin up 43%. 

The markets are lower open across the board.  

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