Market Recap Week Ending March 12

Monday – Dow +306 to 31,802 (record high) Nasdaq (311) to 12,609 and the S&P (20) to 3,821. The Dow soared to a gain of as much as 650 points before falling back to finish up 306 points as the market digested the Senate passage of the $1.9 trillion American Rescue Act. The rotation out of tech continued with the Nasdaq falling 2.4% as the U.S. 10-year Treasury yield rose another 2 bp to 1.60%. Disney (DIS) was the big winner today +6%, after California issued guidance which would allow theme parks to reopen April 1. Apple (APPL), Google (GOOGL), Netflix (NFLX) and Tesla (TSLA) were all down at least 4%. The Nasdaq has fallen more than 10% from its high, entering correction territory.

Tuesday – Dow +30 to 31,832 (record high) Nasdaq +464 to 13,073 and the S&P +54 to 3,875. Investors cheered the 7 bp (0.07%) retreat on the 10-year U.S. Treasury yield to 1.53% and used it as a rationale to pick up some bargains in the much maligned growth space today. Amazon climbed 3.8%, Apple (AAPL) and Facebook (FB) rallied more than 4% each, and Tesla which had fallen from its high of $900/share to $563/share, popped $110/share today or 19.6%! Another high flyer which had been beaten down over the month, Zoom Video (ZM), traded up 10% today…Roblox, a children’s mobile gaming platform, is scheduled to go public tomorrow in a direct listing on the NYSE. The exchange has assigned a reference price of $45/share and the stock will trade under ticker RBLX. Unlike a traditional IPO, no new shares are issued and thus existing holders are free to sell their shares on the market without restrictions. The market will be watching this listing carefully as Coinbase (COIN), a digital currency exchange, most recently valued at $90 billion in a private auction last Thursday, is scheduled to debut via direct listing as soon as this month.

Wednesday – Dow +464 to 32,297 (record high) Nasdaq (5) to 13,068 and the S&P +23 to 3,898. The much talked about and watched U.S. 10-year yield closed unchanged today at 1.53% despite a new government auction of $38 billion 10-year notes that saw strong foreign demand. The Department of Labor released tepid February inflation numbers (Core CPI which strips out the more volatile food and energy prices, came in at only 0.1%, below expectations). Despite the lack of volatility in rates, the rotation into cyclicals continued full speed ahead. Energy, Financials and Materials led ten of the eleven S&P sectors higher. The one laggard was technology which traded down 0.40%…The House passed the Senate’s version of the $1.9 trillion American Rescue Act. The bill now goes to the President’s desk for his signature which is expected Friday…Roblox (RBLX), the children’s mobile gaming platform went public today via direct listing. The stock opened at $64.50 and traded up to close at $69.50 with over 6 million shares traded. Coinbase (COIN) is now on the clock…Tomorrow is the jobless claims report with the market expecting 725k claims vs last week’s 745k print…

Thursday – Dow +188 to 32,485 (record high) Nasdaq +330 to 13,398 and the S&P +40 to 3,939 (record high). Jobless claims threaded the needle for the second week in a row. The goldilocks print of 725,000 claims beat estimates but not by so much as to spark additional inflation concerns, nor did it miss expectations and give rise to the fear that the economy was slowing yet again. In a word, it was “just right.” At least the market and the major indices thought so; Tech, Communication Services and Consumer Discretionary led eight of the eleven S&P sectors higher today and the Dow and S&P set new record closing highs. The Nasdaq, while climbing 2.5% today, is still 5.5% below its record high set last month…The President signed his first signature legislation package today, the $1.9 trillion American Rescue Act, a day earlier than expected. In addition, during his first presidential address this evening, President Biden directed all states to make all adults eligible to receive one of the three Covid-19 vaccines by May 1….In blockchain news, a purely digital piece of art, called Everydays: The First 5,000 Days by Beeple, sold at Christie’s Auction House for a record $69.3 million. The buyer will receive a string of code that represents the piece of art, which will be stored on the Ethereum blockchain and will reside in their wallet at the digital custodian of their choosing. There is no physical piece of art. It exists only in the digital realm and is referred to as a Non-Fungible Token (NFT). Another speculator recently purchased $175,000 worth of basketball highlights over the last six months from Top Shot, the NBA’s digital highlight store. His collection is now valued at $20 million (see Wall Street Journal, “The Whales of NBA Top Shot Made a Fortune Buying LeBron Highlights,” March 9, 2021).

Friday – Dow +293 to 32,778 (record high) Nasdaq (79) to 13,319 and the S&P +4 to 3,943 (record high). Rates jumped today an amazing 11 basis points(0.11%) to reach levels (1.62%) not seen since January of 2020. This was in response to the double barrel dose of good news delivered by President Biden yesterday: the signing into law of the hugely stimulative $1.9 American Rescue Act and the directive that all states open vaccine eligibility to all adults by May 1st. Growth and tech stocks continued to underperform while the cyclical reopening stocks flourished. Consumer Discretionary (+1.5%), anticipating that the stimulus checks will be spent in retail stores, led eight of the eleven S&P sectors higher. Communication Services and Tech were the worst performers. The IRS started processing stimulus checks today and the first payments will begin to be received this weekend….

The week in review…Dow +1282 or 4.1% Nasdaq +399 or 3.1% or and the S&P +102 or 2.7%. Last week’s summary pondered whether the signing of the stimulus bill would spook inflation fears, send rates higher and tank the market. The answer apparently was yes, yes, and an emphatic no. While the Dow outperformed the Nasdaq for the fourth consecutive week, the first time that has happened since last April, the Nasdaq still posted an impressive week. And while the Nasdaq did just fine, the Dow and the S&P set new closing records 6 times between them this week including today. With the American Rescue Act behind us, the focus will now squarely rest on inflation fears and the 10 year treasury yield. Will Chairman Powell continue with his dovish comments towards interest rates on Wednesday or will he begin to prepare the market for the inevitable tapering of monthly bond purchases? Another factor that could push rates higher: during the pandemic the Fed loosened rules to allow banks to hold Treasuries on their books without counting against their leverage ratios. That program is scheduled to end March 31st. If allowed to expire, banks will have to sell Treasuries which would dampen prices and push yields higher.