- The Dow Jones Industrial Average started May on the right foot, with the index climbing over 200 points yesterday as growth names took a backseat. The trend continued overnight as DJIA futures inched up, though contracts linked to the Nasdaq and S&P 500 were off by 0.3% and 0.1%, respectively. Meanwhile, the latest data on the economy is set to arrive this morning, with U.S. factory orders expected to rise 1.3% in March, as consumers demand more goods and services and investors continue to pile into shares that would benefit most from a reopening.
Snapshot: Retail stocks led the market advance on Monday, with Gap (GPS) and Macy's (M) rallying more than 7%. Dillard's (DDS) closed up nearly 10%, while Urban Outfitters (URBN), American Eagle (AEO), Nordstrom (JWN) and Kohl's (KSS) all gained more than 5%. Many feel apparel retailers are poised for a big pickup in sales, as people order fresh attire to wear to the office or for going out to restaurants and attending other social events.
In fact, Jefferies analyst Stephanie Wissink forecasts 47.5% of American consumers are planning to purchase apparel over the next 60 to 90 days, citing data from NPD Group. A pandemic-era high for air travel was also recorded on Sunday, with over 1.6M people screened at airport checkpoints across the U.S. "Buying activity picked up within industrials... Boeing (BA) and Delta (DAL) saw heavy trading activity as investors may be taking advantage of depressed pricing and banking on reopenings," declared Chris Larkin, Head of Brokerage Product at E*TRADE Financial.
More reopening optimism: States are continuing to relax pandemic restrictions due to a series of successful vaccine rollouts. New York Gov. Andrew Cuomo announced Monday that most capacity restrictions will be lifted across New York, New Jersey and Connecticut starting on May 19, while 24-hour subway service will resume in New York City later this month. "We are no longer in a state of emergency," added Florida Gov. Ron DeSantis, who signed an executive order that immediately suspended the state's remaining public health restrictions.
| | Top News  Shutterstock The Dow Jones Industrial Average started May on the right foot, with the index climbing over 200 points yesterday as growth names took a backseat. The trend continued overnight as DJIA futures inched up, though contracts linked to the Nasdaq and S&P 500 were off by 0.3% and 0.1%, respectively. Meanwhile, the latest data on the economy is set to arrive this morning, with U.S. factory orders expected to rise 1.3% in March, as consumers demand more goods and services and investors continue to pile into shares that would benefit most from a reopening.
Snapshot: Retail stocks led the market advance on Monday, with Gap (GPS) and Macy's (M) rallying more than 7%. Dillard's (DDS) closed up nearly 10%, while Urban Outfitters (URBN), American Eagle (AEO), Nordstrom (JWN) and Kohl's (KSS) all gained more than 5%. Many feel apparel retailers are poised for a big pickup in sales, as people order fresh attire to wear to the office or for going out to restaurants and attending other social events.
In fact, Jefferies analyst Stephanie Wissink forecasts 47.5% of American consumers are planning to purchase apparel over the next 60 to 90 days, citing data from NPD Group. A pandemic-era high for air travel was also recorded on Sunday, with over 1.6M people screened at airport checkpoints across the U.S. "Buying activity picked up within industrials... Boeing (BA) and Delta (DAL) saw heavy trading activity as investors may be taking advantage of depressed pricing and banking on reopenings," declared Chris Larkin, Head of Brokerage Product at E*TRADE Financial.
More reopening optimism: States are continuing to relax pandemic restrictions due to a series of successful vaccine rollouts. New York Gov. Andrew Cuomo announced Monday that most capacity restrictions will be lifted across New York, New Jersey and Connecticut starting on May 19, while 24-hour subway service will resume in New York City later this month. "We are no longer in a state of emergency," added Florida Gov. Ron DeSantis, who signed an executive order that immediately suspended the state's remaining public health restrictions.
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| Covid The FDA is preparing to authorize the use of the Pfizer-BioNTech (PFE, BNTX) coronavirus vaccine in adolescents 12 to 15 years old by early next week, according to the NYT, opening up the U.S. vaccination campaign to millions more people. If it is approved, the CDC's vaccine advisory panel is likely to meet the following day to review the clinical trial data and make recommendations for the vaccine's use in young teenagers.
Thought bubble: The expansion would be a major development in the country's vaccination campaign, but is likely to divide parents between those who are eager to expand the level of immunity and those that are skeptical about long-term side effects. With much of the world banking a surplus of vaccines made in the U.S., the use could also raise questions about whether the supply should be targeted to an age group that so far appears to be mostly spared from the severe effects of the disease.
Statistics: As of Monday, about 65M vaccine doses had been delivered but not administered, including 31M doses of Pfizer-BioNTech's vaccine, nearly 25M doses of Moderna's (MRNA) and 10M doses of Johnson & Johnson's (JNJ). Pfizer is authorized for ages 16 and up, while Moderna is authorized for ages 18 and up. Moderna also expects results soon from its own clinical trial involving adolescents ages 12 to 17, followed by results for children 6 months to 12 years old later this year. | |
| Financials Banks that are flush with cash is usually a good thing, as that generally means lots of lending, but something else is awry in the U.S. financial system. Banks like JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) have recently been advising large corporate clients to move their savings out of deposits and into money market funds. According to the FT, a wave of cash flooding bank balance sheets during the pandemic is responsible for the latest flows and could have profound effects on U.S. lenders.
What's happening? In recent quarters, big banks have detailed weaker-than-expected loan demand and have pushed out the timeline of when they predict it to bounce back. In the absence of lending, extra deposits can be costly for banks, putting pressure on their regulatory ratios and eventually requiring them to hold more capital. Strategically moving the deposits to money market funds would be advantageous, as the instruments are managed via their asset management divisions and are not included in leverage ratios.
The four largest U.S. banks - JPMorgan, Citi, Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) - amassed nearly $1T in additional deposits last year due to the scale of fiscal stimulus. Their latest earnings report also revealed that deposits collectively grew by 15% to $6.9T as of March 31, but their combined loan holdings fell 10% to $3.4T. In fact, the loans-to-deposits ratio now sits at 61.5% for all banks in the U.S., the lowest ratio in 48 years. "Even if consumers do draw down to go on trips to Disney World, and companies draw down to build out new warehouse facilities and buy new equipment, they're just not spending fast enough relative to what's coming in," added RBC analyst Gerard Cassidy.
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