Bulletin
Investor Alert

Need to Know Archives | Email alerts

April 5, 2021, 9:53 a.m. EDT

Here’s the $4.5 trillion ‘firepower’ that will drive stocks higher in April, says top strategist

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    S&P 500 Index (SPX)
  • X
    Russell 2000 Index (RUT)
  • X
    Dow Jones Industrial Average (DJIA)

or Cancel Already have a watchlist? Log In

By Barbara Kollmeyer

A new month is off to a bullish start, or so it seems, as stock futures climb following Friday’s better-than-expected, 916,000 gain in March jobs, which underpins investor hopes for a strong post-COVID-19 rebound.

As for the data, there’s a lot to like, according to Tim Duy, chief U.S. economist at SGH Macro Advisors.

“Assuming the pandemic only comes under greater control this year, I suspect a substantial impediment limiting the pace of job growth this year will be the pace at which firms can hire employees. Firing is easier than hiring and employers are now scrambling to add workers,” Duy told clients in a note.

Hence, watch for those “we can’t hire worker” stories, to come, he says.

Onto our call of the day from Fundstrat Global Advisors’s founder Thomas Lee, who says the “face ripper” rally he recently predicted shows no signs of easing up. And there’s a $4.5 trillion reason to believe gains will carry into April, he told clients.

Aside from the positives out there already for this market — a strong economy and vaccine rollout — Lee points to a pile of institutional money on the sidelines, with cash balances at $3 trillion, the highest since June 2020. That’s against $2.764 trillion at the start of 2021, a “dramatic” gain of 9% or $241 billion, said Lee.

A cautious stance by institutions that went “parabolic” in the last half of March, adds to the $1.5 trillion in retail money market cash.

“Total cash on the sidelines is $4.5 trillion = tons and tons of firepower on the sidelines. This bodes well for April equity gains,” said Lee.

Lee expects small-caps, energy and cyclical stocks — geared toward an economic recovery — to continue leading into the second quarter.

“Recall that cyclicals are only 33% of the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.19% overall weight and more than 60% of the Russell 2000 index /zigman2/quotes/210598147/delayed RUT -0.04% .  So if Cyclicals, aka Epicenter, work, small-cap stocks will outperform,” he said.

Watch this chart

Adam Kobeissi, founder and editor in chief of The Kobeissi Letter , expects the bullish jobs report to send the S&P 500 to 4,035 to 4,050 in the near term, but from there he’d like to see it pull back to 3,950 to 4,000, to set up for another higher low before a move toward 4,100.

“Therefore, we are remaining on the sidelines to start this week, as stepping in front of a market this strong is not a stance we want to take, and will maintain a medium term bullish outlook with the intention of getting back into our bullish positions in the wake of a drop in the market,” Kobeissi told subscribers.

The Dow /zigman2/quotes/210598065/realtime DJIA +0.71% is tapping a new record , as it cruises higher, along with the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.19% and Nasdaq /zigman2/quotes/210598365/realtime COMP -0.19% . European markets are closed for an extended Easter break, and most of Asia was also shut . The yield on the 10-year /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.34% note was steady at 1.72%. Data ahead includes the Institute for Supply Management’s March services index and February factory orders.

Oil prices /zigman2/quotes/209723049/delayed CL00 +0.36% are sliding after last week’s decision by the Organization of the Petroleum Exporting Countries and allies to boost production , and after Saudi Arabia boosted prices for Asian customers.

Shares of electric-car maker Tesla /zigman2/quotes/203558040/composite TSLA -0.89% are up 7%. Tesla said Friday that first-quarter deliveries totaled 185,000 cars, beating Wall Street forecasts. Wedbush upgraded Tesla to outperform from neutral , and set a new price target of $1,000, from a prior $950.

GameStop /zigman2/quotes/203755179/composite GME +6.33% shares are down 10% after the games retailer and one of the year’s popular meme stocks said it will sell up to 3.5 million in common shares.

South Korean electronics giant LG /zigman2/quotes/209966407/delayed KR:066570 +0.99% is exiting the smartphone market .

Delta Air Lines /zigman2/quotes/200327741/composite DAL +0.97% had to cancel 100 flights on Sunday due to staff shortages, and will open middle seats sooner than expected.

The U.K. government plans to offer everyone in the country two free virus tests a week . Stocks in India IN:1 tumbled 2% as daily COVID-19 cases hit 100,000, the second country to see that level of cases after the U.S.

A bitcoin revolution is under way and MarketWatch is gathering a cast of crypto experts to explain what it all means. Sign up! Bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.40% , for that matter, is holding steady at $57,422

Random reads

Redditors unleash on trends we hate

Soviet-era TV version of “Lord of the Rings,” rediscovered after 30 years: “Lord of the Rings.”

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Want more for the day ahead? Sign up for The Barron’s Daily, a morning briefing for investors, including exclusive commentary from Barron’s and MarketWatch writers

/zigman2/quotes/210599714/realtime
US : S&P US
4,305.20
+8.06 +0.19%
Volume: 2.22B
Aug. 16, 2022 5:48p
loading...
/zigman2/quotes/210598147/delayed
US : US Composite
2,020.53
-0.82 -0.04%
Volume: 2.62M
Aug. 16, 2022 5:53p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,152.01
+239.57 +0.71%
Volume: 320.97M
Aug. 16, 2022 5:48p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
4,305.20
+8.06 +0.19%
Volume: 2.22B
Aug. 16, 2022 5:48p
loading...
/zigman2/quotes/210598365/realtime
US : Nasdaq
13,102.55
-25.50 -0.19%
Volume: 5.04B
Aug. 16, 2022 5:16p
loading...
/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
2.81
-0.04 -1.34%
Volume: 0.00
Aug. 16, 2022 4:58p
loading...
/zigman2/quotes/209723049/delayed
US : U.S.: Nymex
$ 86.84
+0.31 +0.36%
Volume: 807.00
Aug. 16, 2022 6:17p
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 919.69
-8.27 -0.89%
Volume: 29.32M
Aug. 16, 2022 4:00p
P/E Ratio
110.77
Dividend Yield
N/A
Market Cap
$969.24 billion
Rev. per Employee
$676,463
loading...
/zigman2/quotes/203755179/composite
US : U.S.: NYSE
$ 42.19
+2.51 +6.33%
Volume: 23.57M
Aug. 16, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$12.08 billion
Rev. per Employee
$509,358
loading...
/zigman2/quotes/209966407/delayed
KR : S. Korea: KRX
102,000
+1,000 +0.99%
Volume: 872,610
Aug. 16, 2022 3:30p
P/E Ratio
14.58
Dividend Yield
0.83%
Market Cap
₩17291.51 billion
Rev. per Employee
₩2.20B
loading...
/zigman2/quotes/200327741/composite
US : U.S.: NYSE
$ 35.34
+0.34 +0.97%
Volume: 8.75M
Aug. 16, 2022 4:00p
P/E Ratio
38.36
Dividend Yield
0.00%
Market Cap
$22.44 billion
Rev. per Employee
$503,566
loading...
/zigman2/quotes/31322028/realtime
US : CoinDesk
23,876.84
-95.73 -0.40%
Volume: 0.00
Aug. 16, 2022 6:27p
loading...

This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »

Partner Center

World News from MarketWatch

Link to MarketWatch's Slice.