February 3 – February 7 Week in review
The stock market rallied to new heights again last week, as investors looked past coronavirus concerns and drew encouragement from positive economic data. The Nasdaq Composite was the weeks best performer with a 4.0% gain, followed by the S&P 500, up 3.2%, the Dow Jones Industrial Average, up 3.0%, and the Russell 2000, up 2.7%.
The prevailing view was that the economy is fine and any negative impact resulting from the coronavirus will be minimal, based on economic actions taken by China, reports of progress being made toward a vaccine, and continued upbeat U.S. economic data.
Ten of the 11 S&P 500 sectors contributed to the advance, led by the information technology and materials sectors. The utilities sector was the lone loser last week.
As to the economy data showed nonfarm payrolls grow by 225,000 in January, the January ISM Manufacturing Index return into expansion territory after five straight months of contraction, the ISM Non-Manufacturing Index accelerate for the second straight month in January, and weekly jobless claims fall to their lowest level in nine months.
China shored up confidence after it injected liquidity into its markets to help offset any impact from the coronavirus and said it will cut tariffs on $75 billion of U.S. imports by 50% on February 14th. In addition, reports indicated that the People's Bank of China is planning additional stimulus that will encourage lending activity.
The coronavirus isn't in the rearview mirror just yet, as some companies like Walt Disney and Nike said it will have a negative impact on financial results, but the market is optimistic it won't get too much worse. Apple for its part temporarily closed its China stores but shares still rose more than 3% for the week.
Tesla was arguably the story stock of the week after shares rose as much as 48.9% in a span of less than two days in a short squeeze led buying frenzy. For the week shares ended up 15.0%. Separately, Alphabet reported revenue that was below expectations, but shares overcame initial weakness to end the week higher.
U.S. Treasuries finished last week lower, driving yields higher across the curve. The 2 year yield increased seven basis points to 1.39%, and the 10 year yield increased six basis points to 1.58%.
In other markets the U.S. Dollar Index rose 1.3% to 98.69 and WTI crude fell 2.4%, or $1.23, to $50.35 a barrel, unable to draw enthusiasm from talk of possible production cuts.
February 10 – February 14 Economic Calendar