Stocks fluctuated as mixed economic data highlighted the uneven rebound in activity amid mounting concern over a flare-up in coronavirus cases. The dollar rose. Treasuries stabilized.
Data showed sales of previously owned U.S. homes slid in March to a seven-month low, while jobless claims posted an unexpected decline last week. Investors also sifted through a batch of corporate earnings. Most major groups in the S&P 500 fell, with commodity and financial shares leading losses. AT&T Inc. rallied after beating profit estimates amid gains in wireless customers and growth in subscribers to its streaming service.
While pandemic restrictions have eased with the vaccination rollout, there’s concern over a coronavirus resurgence that could derail the economic rebound. Strategists at Credit Suisse Group AG see red flags in cyclical stocks — warning that the trade may be getting overextended after the largest outperformance on record.
“Investors should start thinking about taking some risk off the table if they have not done so already,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “Much of the good news is priced in. As the rubber meets the road, and we have to now execute on the reopening that the market has discounted, there’s a lot more that can go wrong.”
The stock market might reflect an “all-good-news-is-already-priced-in” scenario, according to Chris Gaffney, president of world markets at TIAA Bank. “The question is: can the data keep up with expectations now, can earnings, can all the good news continue to support higher prices?”
A gauge of market breadth suggests investor concerns remain. The percentage of Russell 2000 members trading above their 50-day moving average fell below 40%, compared to about 80% for the large-cap S&P 500, a smidgen off a record gap, according to data compiled by Bloomberg going back to 1995. It’s too early to tell whether this can morph into something larger, but previous instances have led to subsequent pressure on U.S. stocks, wrote Sundial Capital Research founder Jason Goepfert in a note to clients.
Elsewhere, the euro fell after European Central Bank President Christine Lagarde said the institution isn’t discussing the phasing out of its emergency bond buying even as it sees signs that the economy is starting to shake off the coronavirus pandemic.
Here are some key events to watch this week:
- U.S. releases new home sales data Friday.
These are some of the main moves in markets:
Stocks
- The S&P 500 Index was little changed at 11:16 a.m. New York time.
- The Stoxx Europe 600 Index climbed 0.7%.
- The MSCI All-Country World Index advanced 0.3%.
Currencies
- The Bloomberg Dollar Spot Index climbed 0.1%.
- The euro declined 0.1% to $1.202.
- The Japanese yen was little changed at 108.04 per dollar.
Bonds
- The yield on 10-year Treasuries advanced one basis point to 1.56%.
- Germany’s 10-year yield was little changed at -0.26%.
- Britain’s 10-year yield decreased one basis point to 0.731%.
Commodities
- West Texas Intermediate crude advanced 0.5% to $61.67 a barrel.
- Gold declined 0.5% to $1,784.70 an ounce.
