March 1 – March 5 Week in Review
It was a mixed bag for the markets last week in rather volatile trading. The S&P 500 increased 0.8%, and the Dow Jones Industrial Average gained 1.8%, while the Nasdaq Composite, down 2.1%, and the Russell 2000, lower by 0.4%, pulled back. Higher interest rates were blamed for the underperformance of the Nasdaq.
In general stocks were positive last week with most S&P sectors finishing in the plus column. The energy sector climbed 10%, buoyed by higher oil prices and the financials and industrials sectors followed suit with solid gains. The consumer discretionary, information technology and real estate sectors were the lone losers.
The week started as well as anyone could have anticipated. Each of the major indices rallied at least 2% after the FDA authorized Johnson & Johnson's COVID-19 vaccine for emergency use, the House passed the $1.9 trillion stimulus bill and manufacturing PMIs for February out of the U.S., Europe, and Japan exceeded expectations. Further support to a positive risk outlook was new expectations from the Biden administration to have vaccines available for every adult by the end of May, versus prior guidance of July.
Investors, however, sold into strength as long-term interest rates resumed their recent ascent. From the week's intraday high to the week's intraday low, the S&P 500 was down about 5%, and the Nasdaq was down about 9%.
Selling into strength eventually gave way to the classic buy the dip mindset at the end of the week, especially when considering that the underlying stock moves were far steeper than the index declines. The sharp rebound helped the S&P 500 close positive for the week and above its 50-day moving average.
In the bond market the 10 year U.S. Treasury yield briefly matched the prior week's intraday high of 1.61% before closing at 1.55%, nine basis points higher for the week. The 2 year yield closed Friday at 0.137%.
The spike in interest rates was a reaction to growing expectations for economic growth and inflation aided by an acknowledgement from Fed Chair Powell that the Fed will not intervene in the Treasury market right now to control longer-dated yields, and by stronger than expected jobs growth in February. Nonfarm payrolls increased by 379,000, and nonfarm private payrolls increased by 465,000. Both followed strong upwards revisions for January.
In other markets WTI crude continued its steady ascent closing at $66.09 a barrel, a gain of almost $5 for the week. The U.S. Dollar index strengthened closing at 91.98 and gold prices fell again closing at $1,698.20 an ounce.
March 8 – March 12 Economic Calendar