US stocks rose on Monday, the first day of trading in May, as economic reopening stocks continued to rise.
The Dow Jones Industrial Average rose 300 points. The S&P 500 was up 0.6% and the Nasdaq Composite was up 0.4%.
Berkshire Hathaway shares rose 1% after the Warren Buffett conglomerate saw its operating income rise 20% and continued to buy back large quantities of its own shares. Buffett also announced to CNBC that Greg Abel, vice chairman of all non-insurance-related operations, will succeed him when he is no longer responsible.
Economic reopening bets led the market advance, especially retailers. Disney and Royal Caribbean each rose more than 1%. The gap increased by more than 9%. Dillards was up nearly 10% while Foot Locker, Urban Outfitters and Kohl’s were up nearly 4%.
Verizon’s shares rose 0.9% after the telecommunications giant announced it would sell its media group to private equity firm Apollo Global Management for $ 5 billion. The sale will allow Verizon to outsource real estate from the previous Internet empires of AOL and Yahoo.
Despite Friday’s stock weakness, the S&P 500 made its third straight month of earnings in April, adding more than 5% to the index as investors looked to a strong post-pandemic economic rebound and earnings.
The S&P 500 rose 11% over the course of the year. The benchmark closed on Thursday after the results from Apple and Facebook at a record level.
The Dow was up 2.7% last month while the Nasdaq Composite was up 5.4% in April.
Some investors expect weakness in the new month on the old Wall Street saying “sell in May and walk away”. This mantra is to reduce risk from May to October, a time when the market is historically more likely to sell off.
Data from 1928 shows the May through October period has the lowest average and median returns of any six months of the year, with the S&P 500 66% of the time at an average return of 2.2%, according to the Bank of America grew.
The market could see mediocre performance from here, particularly after a massive rally from November to April when the S&P 500 rose 28%, the bank noted.
“This is a small number of observations, but May-October has poor average and median values after rallying November-April of at least 20%,” Stephen Suttmeier, technical research strategist at Bank of America, said in one Note.
In terms of data, IHS Markit’s data showed that manufacturing activity in the US grew at a record pace over the past month. The manufacturing PMI index rose to 60.5 in April, in line with the expectations of economists polled by Dow Jones.
However, a measuring device separated from the Institute for Procurement Management signaled a slowdown in manufacturing activities. The ISM Manufacturing PMI for April was 60.7 compared to the expected 65.0 and March level of 64.7.
The April job report will be published on Friday.
“Investors are preparing for another busy week that ends with a widely watched job report. Given the positive economic and earnings news, the path of least resistance seems higher,” said Jack Ablin, chief investment officer at Cresset Capital.
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