As mentioned in last week’s commentary, the US bank earnings would set the tone for the week.

Goldman Sachs, JPMorgan and Citigroup all posted their best ever earnings.

Bloomberg reported that Goldman Sachs $17.7B of revenue and $6.84B in earnings both set records for the quarter.

JPMorgan earned $14.4B while Citigroup’s record was $7.94B.

While not every bank made record highs in earnings, other banks like Bank of America and Wells Fargo also posted strong earnings.

While these were market-friendly news, it was the retail sales and jobless claims that kicked the market into high gear for another record closing.

Retail sales was up 9.8% for March, while February was revised up from -3% to -2.7%.

According to Reuters, Economists polled by them only expected a rise of 5.9%.

The rebound was broad base and what’s notable was spending at restaurants and bars jumped 13.4% which was only 1.8% lower compared to March 2020.

Initial jobless claims drop to a fresh pandemic-era low of 576,000 for the week ended April 10, which was 193,000 lower than the previous week.

According to Reuters, economists had forecast 700,000.

At the close on Friday, the Dow was at 34,200.67 up 164.68 (0.48%).

S&P closed at 4185.47, +15.05 (0.36%) and the Nasdaq ended the week at 14,052.34 +13.58 (0.097%).

Technology stocks rebounded well after the scare they had, when 10yr yields went above 1.7% about a month ago.

On Friday, yields were around 1.6%. As long as we don’t see a rapid increase in rates, it should bode well for Tech.

Whether it is rotation back from value to growth, or just FOMO (Fear Of Missing Out) it is hard to tell.

There are several discussions going on about how the market may be due for a pullback. There is also a lot of focus on bitcoin with its fall from making a high of $64,869. Earlier, on Monday morning, it was trading around $56,440.

Ether, the second biggest coin, also experience a similar selloff.

It may be debatable, but coins have been regarded as an asset class.

There has been so much money invested in it, and most likely on leverage.

If margin calls snowball into massive liquidations, it could affect the stock markets.

We also have more earnings to report and while we expect positive releases for the most part, negative surprises may have an impact on stocks in general.

Buy the dips in Stocks and coins? So far, for the stock market, this has been the right strategy. But remember: trying to catch a falling knife can hurt you sometimes.

Source: Reuters, Bloomberg

This commentary was written by James Gomes
James has been in the finance industry for over 30 years and most recently worked for a large US bank for more than 20 years.

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