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Stock Market News for May 17, 2021

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U.S. stock markets closed higher on Friday, led by reopening stocks after the CDC eased guidelines, allowing fully vaccinated people to not wear masks in most places. Moreover, semiconductor stocks boosted the rally in technology sector following a report that U.S. lawmakers were close to unveiling a proposal to boost U.S. semiconductor chip production. All the three major stock indexes closed the day in green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 1.1%, or 360.68 points, closing at 34,382.13, maintaining its two-day winning streak. Notably, 26 components of the 30-stock index ended in green while 4 finished the day in red.

Moreover, the tech-heavy Nasdaq Composite closed the day at 13,429.98, up 2.3%, or 304.99 points, continuing its gains for two successive sessions, on the back of strong performance by large-cap technology stocks. Meanwhile, the S&P 500 gained 1.5%, closing the day at 4,173.85, continuing its gains for the second successive session. The Energy Select Sector SPDR (XLE) and the Technology Select Sector SPDR (XLK) rose 3.1% and 2.2%, respectively. Notably, all eleven sectors of the benchmark index closed in the positive zone.

The fear-gauge CBOE Volatility Index (VIX) was down 18.7% to 18.81. A total of 9.50 billion shares were traded on Friday, lower than the last 20-session average of 10.50 billion. Advancers outnumbered decliners on the NYSE by a 4.63-to-1 ratio. On Nasdaq, a 4.58-to-1 ratio favored advancing issues.

Reopening Stocks Aided Wall Street Rally After CDC Eased Guidelines

The Centers for Disease Control and Prevention (“CDC”) revised its guidelines and stated that fully vaccinated people need not wear masks or physically distance in most places, thereby providing an indication that economic activities can finally return to normalcy.

Consequently, shares of stocks that are dependent on economic reopening gained in Friday’s session. Notably, shares of Carnival Corporation & plc CCL, Norwegian Cruise Line Holdings Ltd. NCLH, Royal Caribbean Group RCL and American Airlines Group Inc. AAL rose 8.1%, 8.1%, 7.4% and 5.6%, respectively.

Chip Stocks Aided the Technology Sector Rally

Semiconductor shares supported the rally in technology sector in Friday’ session following a news report that a group of U.S. senators were close to unveiling a $52 billion proposal to provide a boost to the U.S. semiconductor chip production. Notably, shares of semiconductor names like NVIDIA Corp. NVDA and Skyworks Solutions, Inc. SWKS rose 4.2% and 2%, respectively. Notably, NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

On Friday, the U.S. Census Bureau reported that retail sales remained flat at $619.9 billion in April, falling short of the consensus estimate of 1.1% increase and compared to a rise of 10.7% in March, which was revised upward from 9.8% rise reported earlier.

The U.S. Federal Reserve reported that the U.S. industrial production rose 0.7% in April, falling short of the consensus estimate of a rise of 1.1%, and compared to an increase of 2.4% in March which was revised upward from 1.4% reported earlier. Per the report, there was an increase of 2.6% in output from utilities in April, compared to a revised fall of 9% in March. Moreover, the index for mining rose 0.7% in April compared to a revised increase of 8.9% in March while manufacturing output rose 0.4% compared to a revised increase of 3.1% in March.

Meanwhile, capacity utilization was reported at 74.9% in April, missing the consensus estimate of 75.2%, but higher than 74.4% reported in March.

The U.S. Census Bureau reported that business inventories for the month of March rose 0.3%, beating the consensus estimate of 0.2% increase, but lower than the rise of 0.6% in February which was revised upward from 0.5% reported earlier.

The University of Michigan reported that the preliminary reading of its consumer sentiment index declined to 82.8 in May, missing the consensus estimate of 90.9, and lower than the reading of 88.3 reported in April. The sub-index of current economic conditions declined to 90.8 in May from 97.2 in April. Meanwhile, the sub-index of consumer expectations fell to 77.6 in May compared to 82.7 reported in April.

Weekly Roundup

The week ended May 14 was volatile and the U.S. stock markets saw major indexes declining during the week, with the Dow, the S&P 500 and the Nasdaq Composite declining 1.1%, 1.4% and 2.3%, respectively. The indexes did manage to recover from the sell-off during the last two trading sessions of the week, but they still posted weekly losses as fears of inflation dampened the investors’ sentiment.

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