Stocks kicked off what will be a headline-packed week with largely positive action Monday that pushed the S&P 500 and Nasdaq Composite into record territory.
“This week will be full of catalysts which will include: over one-third of companies in the S&P 500 announcing earnings (that number is much higher when viewed as % of market-cap), a Fed rate decision and … the first look at Q1 GDP and inflation data,” says Michael Reinking, NYSE senior market strategist.
Monday was data-light, however; headline durable-goods orders rebounded in March after a February drop but came in below estimates.
Chip stocks including Advanced Micro Devices (AMD, +3.2%) and Qualcomm (QCOM, +2.6%) lifted the Nasdaq by 0.9% to a record close at 14,138.
The S&P 500 (+0.2% to 4,187) also eked out a new high, with a boost from energy names such as Schlumberger (SLB, +2.5%) and APA (APA, +2.6%).
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The Dow Jones Industrial Average wasn’t quite so fortunate, finishing Monday with a 0.2% loss to 33,981.
Other action in the stock market today:
- Spotify (SPOT, +4.9%) jumped today on news the audio-streaming service is planning on raising prices on some of its subscriptions, with a price hike on its U.S. family plan coming as soon as this Friday.
- Amazon.com (AMZN, +2.0%) rose solidly, but not on solid news. Instead, AMZN got a lift from the rumor mill today, with shares popping on unconfirmed buzz about a possible stock split – one that theoretically would be announced during its Q1 earnings report, due out after Thursday’s close.
- American Express (AXP, +4.2%) managed to brush off broader weakness in the Dow. The stock gained ground as several analysts hiked their price targets after the company reported better-than-expected Q1 profits last Friday.
- U.S. crude oil futures fell 0.4% to settle at $61.91 per barrel.
- Gold gained 0.1% to finish at $1,780.10 an ounce.
- The CBOE Volatility Index (VIX) gained 2.7% to close at 17.80.
- Bitcoin prices sank by 4.8% to $52,967. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
A Surge in Small-Cap Strength
Leading the way today was the “little guy,” with the small-cap Russell 2000 jumping 1.2% to 2,298. Reinking notes that “the Russell’s outperformance is emblematic of some broader risk-on trading behavior seen not only in equities but in other asset classes as well.”
And there’s reason to believe that behavior will continue in the midst of America’s economic recuperation.
“Since 2009, the risk-on cycle has repeated every three to four years. We have observed significant returns in small-cap stocks, cyclical sectors and low-valuation companies, relative to the S&P 500 Index, during the first year of a risk-on cycle,” says Chao Ma, global portfolio and investment strategist for the Wells Fargo Investment Institute.
We’ve recently highlighted a selection of growth-oriented small caps that investors can use to leverage this continuing trend. Today, however, we take a fresh look at 11 small-cap stocks that analysts were bullish on at the start of 2021. The good news? All but one of those picks – which range from high-octane biotechs to real estate plays with market-topping yields – remain buys.