Telemus Weekly Market Review February 22nd - February 26th, 2021
February 22 – February 26 Week in Review
It was an ugly week for the markets last week as a rise in longer term interest rates spooked investors and helped fuel valuation concerns, especially for mega-cap growth stocks. The S&P 500 fell 2.5%, the Russell 2000 fell 2.9%, and the Dow Jones Industrial Average fell 1.8%. The worst performer was the tech heavy Nasdaq which fell 4.9%.
Fed Chair Powell addressed the interest rate situation in his semi-annual testimony before Congress, explaining that it was expectations for economic growth and inflation that have contributed to the higher yields. On inflation, Mr. Powell added it could take three or more years for the economy to reach the Fed's inflation goal. In other words, the Fed will stay extraordinarily accommodative for the foreseeable future.
Despite Powell’s dovish tone it was the sharp rate of change that worked against risk sentiment and presumably functioned as an excuse for some profit taking.
Ten of the 11 S&P 500 sectors closed in negative territory, led lower by the consumer discretionary, information technology, and utilities sectors. As an example of the selloff in growth stocks the Philadelphia Semiconductor Index fell 4.8%, the iShares Russell 1000 Growth ETF fell 4.5%, and the ARK Innovation ETF fell 14.6%. The energy sector, however, rallied alongside oil prices, both of which finished the week with over 4% gains.
On a technical level, the S&P 500 briefly fell below its 50-day moving average on Friday before closing above it.
On the interest rate front the yield on the 10 year Treasury note briefly spiked to 1.61% last week, which was above the S&P 500's dividend yield of 1.51% and 52 basis points higher than where it started the month. It settled the week at 1.46% or 11 basis points higher from last week while the 2 year yield increased three basis points to 0.13%.
In other markets WTI crude continued its steady ascent closing at $61.66 a barrel, the U.S. Dollar index closed higher at 90.93 and gold prices fell again closing at $1,733 an ounce.
March 1 – March 5 Economic Calendar
- Monday
- PMI Manufacturing Final
9:45 AM ET - ISM Manufacturing Index
10:00 AM ET - Construction Spending
10:00 AM ET
- Tuesday
- Motor Vehicle Sales
- Redbook
8:55 AM ET
- Wednesday
- MBA Mortgage Applications
7:00 AM ET - ADP Employment Report
8:15 AM ET - PMI Composite Final
9:45 AM ET - ISM Services Index
10:00 AM ET - EIA Petroleum Status Report
10:30 AM ET
Beige Book
2:00 PM ET
- Thursday
Thursday - Challenger Job-Cut Report
7:30 AM ET
Jobless Claims
8:30 AM ET- Productivity and Costs
8:30 AM ET - Factory Orders
10:00 AM ET - EIA Natural Gas Report
10:30 AM ET - Fed Balance Sheet
4:30 PM ET
- Friday
- Employment Situation
8:30 AM ET - International Trade in Goods and Services
8:30 AM ET - Baker Hughes Rig Count
1:00 PM ET - Consumer Credit
3:00 PM ET
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