- The S&P 500 snapped a six-day winning streak Tuesday amid some minor cash selling ahead of the United States.
- The index remained well supported above 3900 and fundamentals remain favorable.
The S&P 500 broke a six-day winning streak on Tuesday as a result of a little selling pressure seen just before the close of the US cash. In the end, the US main index fell 0.1% on the day, but it remained well supported above the 3900 level. Meanwhile, the Dow ended flat and the Nasdaq Composite was up approximately 0.1%.
It was a consolidation day after an impressive run to the upside in recent days. No notable fundamental developments were seen on Tuesday in any of the major issues driving the equity markets; There was no notable news regarding the passage of US President Joe Biden’s 1.9 T fiscal stimulus package through Congress, nor regarding vaccines or the pandemic (other than the WHO’s conclusion that it essentially cannot determine the origin of Covid-19), or in front of the central bank. Meanwhile, Covid-19 infections in the US continue to decline and it appears that risks related to potentially vaccine-resistant Covid-19 variants have yet to materialize.
Fiserv Inc, Match Group, Cisco Systems Inc, Well Tower and Lyft all reported earnings and, for the most part, beat forecasts. Twitter also reported earnings and beat the results. However, TWTR shares are slightly lower in the secondary market due to warnings from companies that they expected user growth to slow down in the future.
Aside from something emerging from the field on the left (like a completely new vaccine-resistant Covid-19 strain that puts the global vaccination effort back on track, or some other major catastrophe like a major war), the The biggest risk for the markets at the moment could be elevated valuations. Recent moves in small cap and very short stocks like GameStop and more recently in cryptocurrencies like Dogecoin and now Bitcoin are sparking fears that recent price action in major indices is being driven more by “animal spirits” than fundamentals ( that is, investors rush in due to fear of missing out, or anticipating high returns).
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