Overview
Materials sector rises as tech drags on Wall Street
Wall Street ended lower on Tuesday, dragged down by declines in Apple and Tesla stocks as they fell 2% and over 4% respectively. On the other hand, stocks in the materials sectors were up as there is high anticipation for another US stimulus package being passed by Congress in the near future. Gains in materials stocks drove Canada’s TSX up as materials rose 2.22% with additional gains in financials, energy and real estate. Meanwhile back home, Wall Street investors resumed a rotation of investments, as they pulled out of stocks that outperformed during over the past year due to the coronavirus pandemic and switching to stocks viewed as lucrative should the pandemic end soon. Such stocks include those in the materials sectors as supply chains are being restored and demand for raw materials picks back up again.
POLITICS
Stock futures up over optimistic economic outlook and stimulus package
Following a broad decline across most sectors on Tuesday, stock futures were trading up slightly as the US Senate is debating on the passage of another coronavirus stimulus deal that includes $1,400 in stimulus checks, and extended unemployment benefits, with the bill costing upwards of $1.9 trillion. This comes as talks of increasing government spending and reopening of businesses give investors hope of a strong economic recovery. Although in spite of this, fears of increasing interest rates and rising inflation stemming from last week’s jump in Treasury yields.
COVID-19
President Biden sets May as new vaccination goal
On Tuesday, President Biden announced that his administration is eyeing May as the goal to have every adult who wants a Covid-19 vaccine vaccinated. In addition, it was announced a partnership between Merck & Co. and Johnson & Johnson to mass produce its newly approved vaccine. This vaccine differs from the Moderna and Pfizer ones where it only requires one dose instead of two. 3.9 million doses have already been shipped out, with J&J aiming for 100 million by the end of June. This comes as Texas becomes the largest state to ease on its Covid-19 restrictions and lifting its mask mandate. The state has suffered massive setbacks in vaccinations due winter storm Uri shutting down the entire state for a week.
Target and Kohls
Retail giants Target and Kohls beat expectations
Both retail store giants Target and Kohls released their adjusted fourth quarter financials, largely exceeding Wall Street expectations. Although it was unable to provide a future forecast due to high volatility because of the pandemic, it still shows that the economy is in an upwards trend. The $600 stimulus checks provided led people to spend more during the holidays, boosting Target’s sales. This report also shows the increasing importance of a strong online, e-commerce presence, as this was a driving force for increasing sales. Target is greatly outperforming competitors such as Macys and other retailers with sales increasing 5.3% in January and revenue rising 21% to $28.34 billion. Target shares, although closing lower on Tuesday, are up 81% over the past year as it looks to invest more into its online business.
Works Cited
Gomez, Julia, and Sarah Kolinovsky. ABC News, ABC News Network, abcnews.go.com/Politics/biden-announce-merck-produce-johnson-johnson-covid-19/story?id=76204113.
McCormick, Emily. “Stock Market News Live Updates: Stock Futures Open Slightly Higher.” Yahoo! Finance, Yahoo!, finance.yahoo.com/news/stock-market-news-live-updates-march-3-2021-231939919.html.
Repko, Melissa. “Target Earnings Top Estimates as Sales Rise 21%, Boosted by a Surge of Post-Holiday Shoppers.” CNBC, CNBC, 2 Mar. 2021, www.cnbc.com/2021/03/02/target-tgt-earnings-q4-2020.html.
“The Close: TSX Gains as Materials Rally; Wall Street Lower as Apple and Tesla Retreat.” The Globe and Mail, 2 Mar. 2021, www.theglobeandmail.com/investing/markets/inside-the-market/market-news/article-premarket-european-shares-pause-awaiting-next-move-in-bonds/.