Telemus Weekly Market Review March 8th - March 12th, 2021

March 8 – March 12 Week in Review

The markets were back in rally mode as bullish sentiment regained favor. The Dow Jones Industrial Average set intraday record highs every day last week, ultimately rising 4.1%. The Russell 2000, up 7.3%, and S&P 500, up 2.6%, set new highs for the first time in a month while the Nasdaq Composite pulled itself out of correction territory with a 3.1% gain.

Every sector in the S&P 500 contributed to the weekly advance. The consumer discretionary, real estate, materials, utilities, industrials, and financials sectors outperformed the benchmark index. The communication services sector trailed with only a modest gain.

The advance was supported by a confluence of factors, including the following:

• A buy the dip mindset in the heavily-weighted growth stocks, including Tesla, which rose 16%.
• President Biden signing the $1.9 trillion stimulus bill and directing all states to make all adults eligible to be vaccinated no later than May 1.
• The ECB saying it expects to conduct asset purchases at a significantly higher pace over the next quarter than during the first months of this year.
• Weekly initial claims decreasing by 42,000 to 712,000 for its lowest level since the first week of last November.
• No surprising headline inflation readings out of the Consumer Price Index and Producer Price Index reports for February.
• Good-enough 3-yr note, 10-yr note, and 30-y bond reopening auctions.
• Embattled New York Governor Cuomo saying that restaurants in New York City and New Jersey will expand indoor dining to 50% beginning March 19.

The news flow supported growing reopening optimism and inflation expectations, sending the 10 year Treasury note yield up another nine basis points to 1.64% by week's end -- its highest level since last February. The two year Treasury yield increased one basis point to 0.149%.

Interestingly, at the beginning of the week, widely-followed hedge fund manager David Tepper told CNBC that the 10 year yield is likely at, or near, the top of a temporary new range due to the higher yields attracting foreign buyers. This was when the 10 year yield was trading at 1.61%, so investors will continue to watch this over the next few weeks for any uncomfortable swings.

The CBOE Volatility Index dropped 16.1% to 20.69, as investors reduced their hedging exposure amid the bullish price action in the market. In other markets WTI crude took a breather from its steady ascent closing at $65.66 a barrel, the U.S. Dollar index fell slightly closing at 91.66 and gold prices rose closing at $1,725.80 an ounce.

March 15 – March 19 Economic Calendar