First quarter earnings season offered something for everyone. On the positive side, corporate America produced solid results outside of the COVID-19 pandemic trouble spots, which included retailers, travelrelated businesses, and banks. At the same time, 2020 earnings estimates have plunged, and a return to “normal” earnings could be two years or more away.
As we discussed in earlier this week in Markets Due for a Pause, there were multiple technical reasons to believe that US equities were due for some sort a pullback following a more than 30% rally from the March 23 lows. Technical resistance near the 2935 level for the S&P 500 Index, declining participation, and seasonal headwinds all suggested a near-term downward bias.
The number of COVID-19 tests in the US has ramped up significantly, which is a major step to defeating this terrible pandemic. “We know we need more testing to help quickly isolate those infected, and last week we had more than 300,000 tests on consecutive days for the first time ever,” said LPL Financial Senior Market Strategist Ryan Detrick. “What is even better news is the percentage of positive tests has been trending lower, even as more testing has ramped up.”