Market Recap: Monday, May 3

Stocks traded mixed on Monday, with the S&P 500 and Dow looking to kick off May on a high note while the Nasdaq declined. The S&P 500 added about 0.4%, while the Dow jumped by 0.9%. On Friday, the S&P 500 ended ended lower, but still closed out its best month since November with a monthly advance of more than 5%. In April, the communication services and consumer discretionary sectors led gains in the S&P 500, returning to a leadership position after lagging earlier in 2021 amid a rotation into cyclical and "reopening" stocks. However, growth names pared some gains last week, with Federal Reserve Chair Jerome Powell highlighting that some asset valuations appeared "frothy." Blue Line Futures President Bill Baruch and Invesco Chief Global Market StrategistKristina Hooper joined Yahoo Finance Live to discuss.

Video transcript

JULIA LA ROCHE: And we're two minutes away from the closing bell. I want to introduce our panelists as we head into the close. We have Bill Baruch, Blue Line Futures President, and Kristina Hooper, Invesco Chief Global Market Strategist, and of course, our very own Jared Blikre. Jared, I'll have you take us in to the close, breakdown what you've been seeing in the markets.

JARED BLIKRE: Well, it's a day of haves and haves not, and today, it's about the Dow and not the NASDAQ. The Dow was up 2/3 of a percent heading into the final minutes here. You can see that's good for over 200 points, still close to session highs. And the NASDAQ by session lows, down by, actually, new session lows, down half a percent. And it wasn't all the mega caps today.

It was really about software and chip stocks, although we are seeing some weakness in Amazon, that's down 2 and 1/2%, which leads me to my next screen. This is a retail screen, and you can see, well, all that green, those are largely traditional brick and mortar presence retailers, while we have Amazon, Shopify, and Wayfair, those last two down about 5%. Pretty interesting there.

Got to check out the travel space. We're also seeing a lot of mixed pictures here. And Avis Budget Group, this is going to be-- they're going to be reporting earnings after the bell here in a few minutes, so we'll have those brought to you. By the way, this stock, let's check over the last year, you're going to be surprised, maybe, 540%, what an incredible performance there.

Also got to take a check on the EV sector. Now, Tesla largely in the red today. In fact, a lot of the US parts suppliers and EV plays are down pretty significantly. We're seeing FuelCell off 6%. It looks like Lordstown Motors is off the most, down 7% in the lower right. That ticker is RIDE.

But Apple, well, is that a car play? That's in the green here. Ford's also in the green for about 2/3 of a percent. And I'm going to toss it back to you guys so we can watch that closing bell action on the first trading day of the week.

[BELL RINGING]

ADAM SHAPIRO: All right, we got a closing bell, the first trading day of the month of May, and here we go. Are people going to sell in May and go away? Not just yet. Here's where we're going to settle. The Dow is going to be up roughly 239 points. The S&P 500 will also be up roughly 11 and 1/2 points. NASDAQ is going to settle down almost 68 points.

And then the sector action that we just heard from Jared, let's talk about energy in particular. It was up almost 3%, up 2.84% today. All the oil stocks climbing today. There's that discussion about all of us wanting to hit the road for vacation, gasoline prices going up. In fact, I was paying over $3 a gallon, took a road trip over the weekend.

Let's talk about this with the guests, and let's bring them back in. Kristina, I want to talk with you. It's this issue of inflation, specifically because if the Fed is not going to take the punch bowl away but prices are going up, it seems to me that if I'm holding my equities, I better hope they go up because I could get burned.

KRISTINA HOOPER: Well, there are not a lot of alternatives in a low-rate environment, keep in mind. So we do have something of a distorted market environment. And I think that should keep investors in equities, perhaps the more cyclical side of the stock market, given rising inflation. But I don't think this is a time to walk away from stocks.

JULIA LA ROCHE: Bill Baruch, I want to bring you in. You were talking about this kind of hot start this morning to the month of May. What do you make of the action so far? And do you think this is going to be a sell in May and go away kind of situation? Or what do you kind of-- what's kind of your outlook in the near term?

BILL BARUCH: Well, first, I don't like grouping things as sell in May and go away and forget it for six months. But let's take a look at where things have been recently, just this year. And you had a hot start in February, March, and April. And look at February and April, those basically set higher highs really every day. And then March was a bit different. March had a bit of choppiness.

And I think what we're looking for is potentially something more like March where we chopped around a bit and digested February's moves. I think we're going to chop around a bit and digest April's moves. 4,186 is a big level for me in the S&P, and it's been rather sticky.

Yeah, we've been above it. We've also been a little bit below it since achieving it. And I think it's a very sticky level that we're going to see play back and forth. But there's a lot of really good spaces. And you were just talking about energies. I love energies.

ADAM SHAPIRO: Well, what about industrials? I mean, Doctor Copper is at huge prices, Kristina, you've pointed out. And for those of us who are just average investors, I mean, we might be afraid at the price of things going up, but it seems as if this economy isn't going to slow down in the United States, or even globally.

KRISTINA HOOPER: Oh, absolutely. We have this incredible perfect storm in the positive sense of the word, right. We have pent-up demand. We have elevated household savings. We have very, very substantial fiscal stimulus. We have the broad distribution of vaccines that are leading to a strong reopening of the economy in the US.

All these ingredients, we have fiscal stimulus, the potential for an infrastructure spend, that leads to the more cyclical areas of the stock market. Certainly industrials are part of that equation. And I think they look very, very attractive right now. I don't see this economic recovery slowing down any time soon. In fact, I see it accelerating quite significantly.

JULIA LA ROCHE: Bill, let's talk about some-- some of the areas you're paying attention to. You say that you love crude oil. You said also pay attention to the moves in gold and silver today, they should gather legs if they close strongly. So talk to us about what you're paying attention to right now.

BILL BARUCH: Yeah, you were just mentioning the-- the reopening and the big demand out there, Kristina was. And I think that's-- that's a huge thing that you can't miss or you can't ignore here right now. Look at the news this morning. Europe is lifting travel bans. And India, the-- the health services said that the plateau on COVID-19 curve could be here.

That was when the market responded. You saw-- you saw crude oil start jumping. You saw the metals start jumping. But the dollar, the dollar traded lower, because there's safe-haven tailwinds in the dollar right now. So you take those safe-haven tailwinds on the dollar, you have a really very-- very heavy dollar as it is. And it's been trending back down, although the longer-term downtrend is-- for now has been lower.

It had a bit of an intermission, and it recovered over the last 60 days or so. And that-- that kept more of a commodity, some commodities in a stall point, specifically gold and silver. The dollar is going to resume its downtrend. I think silver looks really good here, what we've seen today. But platinum too, gold as well.

And you know, copper has-- has had a heck of a move. But I would pay attention right here to silver, you know, this technical pattern where it's consolidated for the last couple of weeks. And this was a bit of a breakout of-- of a bull flag-like pattern. So I think silver has some good tailwinds. But-- but just in any commodities, the demand space is going to see continued tailwinds. You get these reopening trades and a weaker dollar.

ADAM SHAPIRO: Bill, are people still using gold as a way to protect their wealth from inflation? Or have they given up and is it all Bitcoin? Because I'm looking at Bitcoin right now, $57,450-plus. So what's your take on this, because gold was up today too?

BILL BARUCH: I think you need to be invested in both spaces. And I'm not saying throw your entire portfolio into this stuff, but give a 10% carve-out for-- for, say, real assets or inflationary assets, you know, a 15% carve-out of your portfolio that's invested, and then you could really do a number of ways. And you know, what I look at Blue Line Capital, our registered investment advisor arm, I have a number of different things involved in there, even including midstream energy, so investing in crypto, investing in gold and gold miners, platinum, palladium, hard assets.

I think you need to have that in order to track the inflation. Yeah, and gold has been hurt by the rise in yields. But-- but platinum and palladium certainly haven't Crude oil certainly hasn't Bitcoin is really maybe-- maybe it's slowed, but it's already five times where it's been over just about a year ago. So I think you need to have a little bit of a carve-out of your portfolio for hard assets to track that-- that inflation fears.

JULIA LA ROCHE: Well, Bill and Kristina, stay with us, but I want to bring in Jared Blikre again to break down Avis' earnings. Jared, what are they?

JARED BLIKRE: Well, we got beats on both the top and bottom lines. They're not big beats, but the stock is down about 1% in after-hours trading. So let me get right to the numbers. Net revenue for the first quarter came in at $1.37 billion. That's down 24% year-over-year but higher than the estimate of $1.22 billion.

Adjusted loss per share was $0.46, and the estimate was for a bigger-- a wider loss at $1.95. And then the American per unit fleet cost, this key metric is down 22% versus being down 10% year-over-year. They are not providing guidance at this time. This is a stock that's been on a tear.

Let me just show you a one-year chart here on the Y Fi Interactive. You can see year-to-date, they're up 138%. And let's go to that year chart, up 540%, so huge gains there. I also want to highlight something from the report. This has to do with the semiconductor shortage.

They're saying "that global shortage is causing uncertainty in fleet supply and resulting in tighter fleets throughout the entire industry. We've historically navigated through difficult vehicle recalls, and we believe we have the logistics in place to effectively manage our fleet during this disruption in supply." And I'll tell you what, I would-- I've been tracking this story throughout the day, wholesale used cars prices are up 50%, which is a huge amount, and it has yet to really feel its way into the retail market.

But these guys, these rental car agencies, they are now net buyers of used cars when they used to be net sellers. So huge disruption in the industry going on right now. Just taking a look at the stock, still down about 1% in after-hours trading, but some small beats. And I think the investors will take them.

JULIA LA ROCHE: Thanks for breaking that down. Kristina, I want to bring you back. Your reaction to-- to what Jared was just breaking down. I know maybe we're not talking individual stocks here, but maybe some of the themes that you can pull from that, whether it's the demand for the used cars or the semiconductor supply chain issues that we've been talking about, what are your kind of views on those?

KRISTINA HOOPER: Well, I think one key thing that we saw today and we've seen recently is this return to normal, or at least some version of normal, that people are going to get back out on the road again, that people are going to go into stores again. And so we saw that there was some excitement around more of the traditional retailers. We saw, of course, there's been excitement in recent months around rental car companies.

And-- and I think that that's an important theme that there are some things that are likely to change, how we work. The amount of days we actually commute and go into an office might change. But there's some things that aren't going to change, and most of them are the personal side, right, traveling, vacation.

There is-- I talked about pent-up demand. There is an enormous amount of pent-up demand for that return to pre-pandemic living. And so I think that we're going to continue to see that theme. It's going to be expressed, I think, in many ways going forward. And this is just the tip of the iceberg.

ADAM SHAPIRO: Kristina, if I can follow up on this, though, one thing we talk about with inflation, when the Fed looks at inflation, it's our expectation, meaning us as 332 million Americans, that prices aren't going to go down. And the Fed is still telling us that they will. When you look at what Avis just said, when you look at the shortage of cars and people need to buy cars, the price is up right now, people need to buy homes, prices are up, we know this story, why do you not think the Fed is going to have to pull the punch bowl away sooner than they expect?

KRISTINA HOOPER: Well, you're absolutely right, inflation is on everyone's minds, including companies. In fact, we saw a huge increase in the references to the term inflation in earnings calls that we've heard thus far for the first quarter. So you're absolutely right, we're seeing prices increase. We hear that all the time. We're experiencing it in very personal ways, as well as seeing that in the data.

But that does not mean the Fed is forced to act. In fact, it did something last year in terms of changing its inflation targeting policy that gives it more flexibility. So the Fed essentially can be and do what it wants more easily now than it could have in the past. And so what I think that means is that the Fed is going to roll the dice and bet that this is transitory inflation.

It's already said that it expects a surge in spending that could easily lead to inflation spikes but that it is not going to act because it is not sticky inflation. And that's really, of course, the big danger is that stickiness of inflation. And actually, I would tend to agree, because I think we do have a very significant amount of pent-up demand, people yearning for those past lives. But how many haircuts can you get? How many vacations can you go on? And so there will be a point that we get to where I believe spending will normalize.

JULIA LA ROCHE: Well, I want to thank our guests today, Kristina Hooper, Invesco Chief Global Market Strategist, and Bill Baruch, Blue Line Future President. Thank you both.