Market Recap Week Ending February 19
Monday – Markets Closed in Observance of President’s Day.
Tuesday – Dow +64 to 31,522 (record close) Nasdaq (48) to 14,047 and the S&P (2) to 3,932. All three indices set intraday highs before falling back down to close in negative territory with the exception of the Dow, which eked out another record close. Strong was the reopening trade today. Energy, +2.26%, led only three of the eleven S&P sectors higher, leaving the remaining eight to trade in the red. However, retail, restaurants, airlines, lodging and casinos all traded up strongly today. The U.S. 10-year Treasury yield spiked to 1.30% for the first time since February of 2020. That supported a broad rally in the financials today (+1.77%)…Verizon (VZ) traded up post-close as did Chevron (CVX), after Berkshire Hathaway revealed an $8.6 billion position in the former and a 40 million share position in the latter…CVS Health (CVS) traded up slightly post-close after reporting better than expected top and bottom-line earnings numbers and announced they will reenter the individual public exchange established by the Affordable Care Act next year. The drugstore also announced that as of last week it has been receiving Covid vaccines shipped directly from the Federal government to its stores in 11 different states (including California. https://www.cvs.com/immunizations/covid-19-vaccine )….
Wednesday – Dow +90 to 31,4613 (record close) Nasdaq (82) to 13,965 and the S&P (1) to 3,931. The broader market was flat while the Dow set yet another record high, based on the strength of Verizon (VZ) and Chevron (CVX) after yesterday’s announcement that Warren Buffet had taken sizeable positions in both companies. Energy, +1.45% led eight of the eleven S&P sectors higher (mostly due to CVX’s move). Tech was the worst of the laggards, down 1% as a result of interest rates moving higher (technology and rapidly growing companies are more susceptible to rising interest rates as it increases their cost of capital needed to expand). The 10-year U.S. Treasury note continued to sell off, sending yields up to 1.3%. Despite the fact that the benchmark 10-year yield has risen from 1.1% to 1.3% in 5 trading days (an 18% move), Fed Chair, Jerome Powell continued to reiterate his “lower interest rates for longer” mantra at a press conference today…January retail sales crushed expectations, up 5.3% vs +1.2% expectations and December’s -0.7% print as consumers spent their $600 stimulus checks…Hilton Worldwide (HLT) posted a surprise Q4 loss due to renewed travel restrictions and traded down 1.92% post-close…Shopify (SHOP) crushed their Q4 numbers but cautioned regarding 2021 results and traded down 3.32% in extended hours…Twilio (TWLO) delivered a surprise profit and traded up 11% after hours…Fastly (FSLY) beat numbers but apparently the Street wasn’t impressed as the stock sold off 4.26% after the announcement….
Thursday – Dow (119) to 31,493 Nasdaq (100) to 13,865 and the S&P (17) to 3,913. Jobless claims disappointed at 861k vs expectations of 765k and last week’s 848k print. In addition to the jobless claims number Walmart (WMT) missed their Q4 earnings numbers, guided 2021 lower than expected and announced a pay increase for its hourly workforce that will raise the average salary above $15/hour…Nine of the eleven S&P sectors traded in the red today, led lower by Energy (-2.27%)….
Friday – Dow +1 to 31,494 Nasdaq +9 to 13,874 and the S&P (7) to 3,906. Comments made by Treasury Secretary Janet Yellen on Thursday that additional stimulus was needed led the economically sensitive stocks higher today at the expense of growth stocks. Materials, Energy, and Industrials led only five of the eleven S&P sectors higher. Also assisting the reopening trade was the news that Pfizer’s (PFE) Covid vaccine showed in a study that just one dose has 85% efficacy, possibly eliminating the need for a booster shot which would effectively double the supply of their vaccine. Further studies will be needed before a one-shot regimen is put into practice…On Capitol Hill, President’s Biden’s $1.9 trillion Rescue America package passed out of the House Budget Committee and is tentatively scheduled for an up or down vote a week from today….
The week in review…Dow 36 or 0.01% Nasdaq (221) or 1.5% and the S&P (28) or 0.7%. It almost feels like last summer again where all eyes and news is regarding the stimulus package and the various details of said bill as well as vaccine news. The positive news on both of those fronts pushed cyclical stocks back to forefront of the market as restaurants, retail, airlines, lodging, gaming, and financials all had a good week at the expense of growth stocks. The other major news story this week was the yield on the U.S. 10-year Treasury which climbed another 5 basis points today to close at 1.35%. Both Secretary Treasury Yellen and Fed Chair Powell talked down the dangers of inflation this week saying that stimulative policies were still needed and would be needed for the foreseeable future despite the abrupt rise in interest rates. As rising rates affect everything from growth stocks to the housing markets, this is a data point that bears watching going forward….
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities…AAPL, Bitcoin (physical), Chainlink (physical), Ethereum (physical), GBTC, GME April $20 Puts, LAZR, and VLDR.