Morning Minutes

Earnings, GDP and Fiscal/Monetary Support Drive US Stocks Higher




A series of positive developments for market sentiment over the last 24 hours has US index futures climbing 0.4% to 1.0% this morning. Commodities are also on the move upward with WTI crude oil up 1.5% and copper up 1.0%.

First off, yesterday’s FOMC meeting and President Biden’s speech yesterday both came and went with no surprises with both fiscal and monetary stimulus plans proceeding as before. With no new negative surprises from either side, short-term event risk that may have kept some bulls on the sidelines as gone away, and has enabled investors to turn their focus back toward economic news and earnings reports.

On the economic side, US Q1 GDP handily beat street expectations (4.1% vs street 2.5% and previous 1.9%). Meanwhile, press reports suggesting that New York City is preparing for a full reopening on July 1st as vaccinations continue has added to the reopening anticipation tailwind for stocks and commodities.

It’s another big day for earnings reports on both sides of the border. US overnight highlights include: Apple ($1.40 vs street $0.99), McDonalds ($1.92 vs street $1.81), Facebook ($3.30 vs street $2.27), Ford ($0.89 vs street $0.21),  Caterpillar ($2.87 vs street $1.90), and Qualcomm ($1.90 vs street $1.67).  Big Pharma results, however, came in below expectations as the laser-beam focus on COVID in the health care sector had a negative impact on other diseases and treatments, according to the managements of Merck ($1.40 vs street $1.63) and Bristol-Meyers ($1.74 vs street $1.81).

The main earnings event in Canada overnight was results from Shopify who crushed street estimates on earnings ($2.01 vs street $0.75) and sales ($988M vs street $862M). Management did suggest, however, that growth could slow this year as economies reopen and customers return to brick and mortar stores.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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