Markets Look to Keep Levels Aloft

Monday, August 30, 2021

Market indexes are climbing slowly ahead of the first trading day of this final week before Labor Day. Historically, we see low volume and fewer economic prints in a week like this; as a result, we tend to see fewer big moves among the indexes. This is mostly the case for the week ahead, although we also get August jobs numbers on Wednesday (private-sector ADP payrolls) and Friday (non-farm payrolls from BLS).

Currently, the Dow is up 15 points at this hour, with the S&P 500 +5 and the Nasdaq +12. Both the Nasdaq and S&P have closed in the green six of the past seven sessions, now again at or near all-time highs. The Dow is within half a percentage point of an all-time high of its own, and has grown five of the past six trading days. All indexes are on pace for gains in the month of August.

After the open, Pending Home Sales for July are expected to report. We saw the biggest monthly drop of the year in the June read, -1.9%. This followed a +13.4% in May and easily the best-ever monthly total +51.7% in April. For the trailing 12 months, average pending home sales are +17.9%. There is still lots of interest in buying a home, but price points have kept millions of Americans out of the market.

Although we are almost finished with calendar Q2 earnings season, we will see results from Zoom Video ZM today. Shares of the stay-at-home economy winner have been volatile but roughly flat year over year, and -5% year to date. Earnings are expected to grow 26% from the year-ago quarter, while revenues look to gain 49% from Q2 2020.

Zoom has posted no earnings misses in its short history as a publicly traded entity, dating back to Q2 2019. However, its share price is well off the record-high $559 per share we saw back in mid-October of last year. Analysts will be interested in seeing progress on its Enterprise business, now that the stay-at-home play has dissipated to a certain extent. Zoom carries a Zacks Rank #4 (Sell) into its earnings release.

We are finished hearing from what the Fed is going to do about tapering asset purchases in the face of improving employment numbers and an inflation rate running hotter than the optimum 2%. Perhaps we’ll hear some speculation about their next meeting by the end of this week, depending on monthly jobs totals. Last month, the U.S. government recorded 943K new jobs, with the Unemployment Rate having fallen to a post-pandemic low 5.4%.

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