Market Update (February 8)

MARKETS:

Written By: Sergio Lopez Elizondo, Junior Analyst

Overview

Good day for the markets

February 8, 2022 played out well for the three major indexes as they all closed the day with approximately 1% growth. This bodes well for the recent recovery in the market as investors await for the forthcoming rise in interest rates. The Fed announced in late January that due to the high inflation rate of over 2%, it would raise the interest rates in March. Consequently, the markets began to rise, and we have continued to see the major indexes experience consistent growth. This effect on American markets has spread around the globe, and especially in Asia, the major indexes have mirrored domestic growth. These markets, as well as investors at home await for this Thursday’s release of inflation data

U.S. Economy & Drugs

The US faces unprecedented loss in opioid related deaths

The U.S. Commission on Combating Synthetic Opioid Trafficking has released their report on opioid overdose deaths, and it has found that last year the number of fatalities was 100,000 Americans. This number of deaths was a 30% increase from the previous year. Experts have calculated that these drug overdose deaths are costing the United States $1 trillion dollars every year. This staggering number arises from the lost productivity of the people that pass, along with any costs associated with health care and enacting any subsequent criminal justice. The number of drug overdoses has been rising steadily since the early 2000s, and President Biden has declared the illicit drug trade a national emergency.

Facebook

Facebook closes at lowest market valuation since May 2020

Facebook’s market cap closed the day by falling to $599.32 billion, the lowest it has been since May 2020. While this was a loss of 2.1%, such a drop in the market cap of Facebook will potentially benefit the company rather than indicate a downward trend in stock value. The company is currently under an antitrust lawsuit against its acquisition of WhatsApp and Instagram. This drop in valuation might actually help Facebook with this lawsuit and future business dealings. It coincidentally happens that House legislators chose $600 billion as the minimum market cap value for a company to be included in a set of potential bills that target big technology companies. By falling below this figure, Facebook might find some pressure relieved from their current lawsuit and less scrutiny from the Federal Trade Commission. While this might seem good for Facebook, other senate bills have proposed a minimum market value figure of $550 billion along with a clause that allows companies that dip below the minimum value to still be targeted by such bills. 

Social Security

Social Security is on track to cut benefits by 2034

A recent report by the Social Security Trustees found that benefits of retirees will be cut to 78% of expected value in 2034. This will result in over 50 million retired workers not receiving the promised benefits that they have paid into Social Security throughout their life. Social Security hasn’t had a deficit since 1983, and this deficit was quickly overturned through bipartisan legislation. Today’s political sphere also requires a bipartisan agreement and new legislation to fix the funding for Social Security. The two main methods that Congress might use to properly fund this program are to either cut benefits now or increase the retirement age, or to increase tax revenue by increasing the tax rate or increasing the maximum tax amount of $147,000. Such methods seem drastic but are needed to fix the funding issue; unfortunately, given the length of time between present day and the expected date that benefits will be cut, it is unlikely that Congress will act on this issue.

Works Cited

“Asian Markets Rise as Investors Await U.S. Inflation Data.” MarketWatch, MarketWatch, 8 Feb. 2022, https://www.marketwatch.com/story/asian-markets-rise-as-investors-await-u-s-inflation-data-01644380975.

Cox, Jeff. “Federal Reserve Points to Interest Rate Hike Coming in March.” CNBC, CNBC, 26 Jan. 2022, https://www.cnbc.com/2022/01/26/fed-decision-january-2022-.html. 

Feiner, Lauren. “Facebook Market Cap Falls below $600 Billion - Which Could Actually Help It Dodge New Antitrust Scrutiny.” CNBC, CNBC, 8 Feb. 2022, https://www.cnbc.com/2022/02/08/facebook-market-cap-under-600-billion-threshold-for-antitrust-bills.html.

Langley, Karen, and Will Horner. “Bond Yields, Stocks Rise amid Earnings.” The Wall Street Journal, Dow Jones & Company, 8 Feb. 2022, https://www.wsj.com/articles/global-stocks-markets-dow-update-02-08-2022-11644309070.

Taylor, Chloe. “Drug Overdoses Are Costing the U.S. Economy $1 Trillion a Year, Government Report Estimates.” CNBC, CNBC, 8 Feb. 2022, https://www.cnbc.com/2022/02/08/drug-overdoses-cost-the-us-around-1-trillion-a-year-report-says.html.

Market Update (March 29)

MARKETS:

Written By: Sarah Lee, Vice President of Investments

Economic Risks

Investors’ Concerns Are No Longer COVID-19 Related

In an improving and recovering economy, professional investors new number 1 fear is inflation. Based off a survey through BofA Securities, fund managers now say that inflation topples COVID-19 as the biggest threat to the bull market. From the survey, 91% see the economy improving and 48% said we’re in a “V-shaped recovery.” However, higher bond yields that signal economic growth also means a higher borrowing cost, which could reverse the recovery. Additionally, a higher discount rate means lower valuation for assets like stocks.

The White House has discussed a tax on high income individuals or corporations to help with Covid-19 relief. Treasury Secretary Janet Yellen, is using the Organization for Economic Cooperation and Development to press for a global minimum corporate tax that would end historical corporate tax-cutting competition.

U.S. Employment

Jobless Claims Reach Lowest Level of the Pandemic

Signaling a prosperous economy is low unemployment. Jobless claims fell to their lowest level last week since the start of the pandemic as hiring and consumer spending drive a U.S. economic revival. Unemployment filings have fell to 684,000 last week form 781,000 a week earlier. Although a decrease in unemployment filings are a go for the economy, the benefits of the recovery aren’t reaching everyone yet. Many Americans are suffering from spells of long-term unemployment. Americans are still ramping up spendings with stimulus checks out into their pockets and widespread vaccinations. In-person services are also seeing pre-pandemic levels such as salons, gyms, hotels, and restaurants.

Real Estate

Hot Housing Market with Overflow of Real-Estate Agents

Where there were 1.04 million homes for sale at the end of January (record low from 1982), the number of real-estate agents surge in comparison to homes for sale in the U.S. This phenomenon reflects both the extremely tight supply of homes on the market and how the uptick in prices are convincing thousands of Americans to sell their real estate. As the pandemic eliminated millions of jobs, many people sign up for the real-estate profession. The booming housing market suggests theres a lot of money to be made selling houses. Newer agents are struggling as home sellers generally favor agents with years of experience and a track record of selling homes. Consequently, most agents make little or even no money in the beginning since they typically rely on commissions. Realtors with two years of experience or less earned a median gross income of $8,900 from their real-estate work in 2019.

Financials

Big Banks Limiting Losses With Fast Sale of Archegos Assets

Goldman Sachs Group Inc. and Morgan Stanley were quick to move large blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of hedge fund’s losses became apparent. Formerly ran by Tiger Asia Manager Bill Hwang, the losses at Archegos have triggered the liquidation in excess of $30 billion in value. Throughout Monday, blocks of stocks linked to Archegos continued to sell off. Archegos took concentrated positions in companies and help some positions in a miix of stock and swaps. Their losses threatened to spill over into the prime brokerage businesses. Morgan Stanley sold 45 million shares of ViacomCBS Inc. Sunday night, and other banks continued to sell blocks of companies such as Discovery Inc., GSX Techedu Inc., and Vipshop Holdnigs Ltd.

Archegos losses comes as a council of top U.S. regulators known as the Financial Stability Oversight Council and is already scheduled to meet on Wednesday to discuss hedge-fund activity during the pandemic-triggered crisis. Many are pointing to cases that may effect many on Wall Street in the coming week.

Works Cited

Cambon, Sarah. U.S. Jobless Claims Reach Lowest Level of the Pandemic - WSJ. https://www.wsj.com/articles/weekly-jobless-claims-coronavirus-03-25-2021-11616627094?mod=itp_wsj&ru=yahoo. Accessed 29 Mar. 2021.

Chung, Maureen Farrell, Margot Patrick and Juliet. “Goldman, Morgan Stanley Limit Losses With Fast Sale of Archegos Assets.” Wall Street Journal, 30 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/goldman-morgan-limit-losses-with-fast-sale-of-archegos-assets-11617062028.

Friedman, Nicole. “New Realtors Pile Into Hot Housing Market. Most Find It Tough Going.” Wall Street Journal, 21 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/new-realtors-pile-into-hot-housing-market-most-find-it-tough-going-11616328002.

Jasinski, Nicholas. This Is Investors’ Biggest Concern Right Now. (Hint: It’s Not Covid.). https://www.barrons.com/articles/investors-are-wary-of-covid-but-their-new-top-risk-is-inflation-51616197535. Accessed 29 Mar. 2021.

Market Update (March 10)

COVID-19 Stimulus

Congress passes long awaited stimulus bill

On Wednesday, Congress officially passed the massive $1.9 trillion coronavirus relief bill, sending it to President Biden, who hopes to sign it on Friday. This is the largest ever stimulus package passed in the US, extending $300 unemployment benefits till September 6, sending $1,400 stimulus checks to eligible Americans, expanding child tax credits, providing aid to small businesses and state governments and more. The passing of the bill boosted markets early in the day, as it had been long awaited for the past few weeks and serves as the first major win of the Biden administration. Increase in spending is also allocated towards vaccinations, which are ramping up and Biden setting a goal for all adults being vaccinated by the end of May.

Unemployment

Better than expected job report shows recovering economy

The Labor Department released data for the week ended March 6 showing less than expected jobless claims, to a seasonally adjusted 712,000 vs expected 725,000. Continuing jobless claims continued to fall, alongside news that a vast majority of the population will be vaccinated in the near future. Strong hiring sprees amid a rapidly recovering economy added 379,000 jobs in February. Household spending has also risen due to the government stimulus checks and unemployment is down to 6.2% in February from a high of 14.8% in April 2020.

MORTGAGES

Mortgage rates continue to decline

Based on data provided, mortgage rates have declined again, especially the 10 year mortgage and refinancing rates falling, down 2% and 2.125% respectively. Both remain hovering around all time lows, as increasing amount of people are looking to buy new homes with the coronavirus pandemic seemingly coming to an end soon and a full economic recovery on the frontier. Despite this, mortgage refinance demand is down 43% from a year ago, while mortgage applications for home buyers rose 7% for the week, and is up 2% from the year prior. Rising interest rates are fears that are plaguing investors, but for the meantime, the general public remains optimistic as more people continue to borrow.

US MARKETS

Markets were up Wednesday following positive economic outlooks

US markets were up on Wednesday following Tuesday’s surge and tame inflation data. While rising Treasury yields and potential inflation worries current investors, positive economic data is easing these fears as the market shrugged off these worries. In addition, the US government announced Wednesday morning that February consumer price was up 0.4%, and certainly to be boosted in March and subsequent months due to the passing of the coronavirus stimulus package.

GE

General Electric announces sale of jet leasing business in merger with AerCap

Amid a struggling time for the aviation industry, GE on Wednesday announced they would be selling their jet leasing business to AerCap in a deal valued at $30 billion. The merger would give GE a 46% stake in the combined firm and reported to generate $24 billion in cash. The deal would streamline and combine GE’s GE Capital with the broader corporate structure of the entire conglomerate. The deal is set to reduce up to $30 billion of debt as both GE and AerCap were trading lower in the afternoon. This is following reports that S&P Global Ratings is planning on lowering the firm’s credit score due to higher than normal debt leverage due to the consolidation of GE Capital, which took massive blows during the financial crisis. The deal is a step forward for both companies, with increased market capitalization, consolidation of assets, debt reduction, and diversification into the aviation sector which many believe will rebound.

Works Cited

Belvedere, Matt. “5 Things to Know before the Stock Market Opens Wednesday.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/5-things-to-know-before-the-stock-market-opens-march-10-2021.html.

Fenske, Chris. “Daily Global Market Summary - 10 March 2021.” IHS Markit, 10 Mar. 2021, ihsmarkit.com/research-analysis/daily-global-market-summary-10-march-2021.html#:~:text=Most%20US%20equity%20markets%20closed,%2DNAHY%20%2D10bps%2F300bps.

Franck, Thomas. “Weekly Jobless Claims Rise Less than Expected with Biden Set to Sign $1.9 Trillion Covid Package.” CNBC, CNBC, 11 Mar. 2021, www.cnbc.com/2021/03/11/weekly-jobless-claims.html.

Jennings, Chris. “Today's Mortgage Rates Continue to Decline, Hover near Historical Lows: March 10, 2021.” Fox Business, Fox Business, 10 Mar. 2021, www.foxbusiness.com/money/todays-mortgage-rates-march-10-2021.

Josephs, Leslie. “GE to Merge Aircraft Leasing Unit with Rival AerCap in a $30 Billion Deal as Industry Faces More Pandemic Turmoil.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/general-electric-aercap-aircraft-leasing-merger.html.

Olick, Diana. “Mortgage Refinance Demand Plunges 43% from a Year Ago, as Higher Interest Rates Take Their Toll on Borrowers.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/mortgage-refinance-demand-plunges-43percent-from-a-year-ago.html.

Pramuk, Jacob. “House Passes $1.9 Trillion Covid Relief Bill, Sends It to Biden to Sign.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/stimulus-update-house-passes-1point9-trillion-covid-relief-bill-sends-to-biden.html.

Market Update (March 8)

MARKETS

Written By: Sarah Lee, Vice President of Investments

ENERGY

Intercepted Missile and Drones at Saudi Arabian Oil Site

On Sunday, Saudi Arabian oil infrastructures came under missile and drone attack, escalating the regional hostilities and pushing up crude prices. The attacks were intercepted and oil output appeared to be unaffected, but the assault came from Iran-back Houthi rebels. Oil prices were push to above $70 a barrel for the first time since January 2020. There was no loss of life or property, but it is confirmed that the oil tank farm in Ras Tanaura terminal was targeted – the world’s largest oil export port. Prior to this attack, last September Saudi oil instillations came under fire through strikes resulting in a cut in production for about a month. This also exposed the vulnerability of the kingdom’s petroleum industry. This attack will further complicate efforts by U.S President Joe Biden to engage in nuclear diplomacy with Iran. Intraday, BRENT is down at $67.96 (-1.40%)

FED

Selloff in U.S. Government Bonds Eroded Demand for Technology Stocks

The Dow Jones Industrial Average climbed Monday to record levels, surging up 306.14 points (1%) to 31802.44, following progress on a new fiscal stimulus bill that is creating optimism in the economy. Meanwhile, NASDAQ Composite fell 2.4% as tech stocks are still on their decline. The result of rising bond yields halt the favoring of growth stocks such as big tech companies. As the economy shifts, value stocks are be favored. Apple shares dropped 4.2%, adding onto their declines for the year to 12%, while Tesla slid 5.8% losing more than 20% in 2021. Within the bond market, yield on benchmark 10-year U.S. Treasuries ticked up to 1.599% on Friday, which is its highest since February 2020. Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management stated, “The underlying strength of the U.S. economy, growing expectations that the stimulus gets fully passed, plus inflation expectations rising because of oil: These are all likely to continue to push bond yields higher.”

REAL ESTATE

Manhattan Apartments Rental Market at a Slump

With the reduced demand of Manhattan apartments during the pandemic, landlords are pulling unrented apartments off the market, tightening inventory while rents are low. This is commonly known as “warehousing,” where the supply of apartments are reduced when demand is at a low. It has come under scrutiny from housing advocates and lawmakers, because it creates an artificial scarcity that worsens the city’s housing shortage. However, landlords say that warehousing is necessary to respond to both regulatory and economic changes. Landlords are using this practice to avoid signed deeply discounted leases, and could be betting on potential price rebounds this spring and summer leasing season when the Covid-19 vaccine is more accessible. The median rental prices are down more than 17% for the year ending in December.

AIRLINE

American Airlines Target to use Frequent-Flier Program to Raise $7.5 Billion

AA and other carriers have found relatively stable cash flows form their frequent-flier programs, and poses as a rich source of collateral for financing. The company said it would raise $7.5 billion back by its program, to repay a loan from the federal government during the peak of the coronavirus as it wiped out demand for air travel. The carrier said on Monday that it would issue $5 billion in notes and seek a $2.5 billion term loan back by AAdvantage. Currently, this is common in the industry as both Delta Air Lines and United Airlines tapped their respective frequent-flier program to land extended financing. The main way airlines earn money from frequent-flier programs is by selling miles to banks and retailers that then award them to customers who sign up for credit cards. Therefore, airlines benefit from every swipe of a co-branded card, whether customers are buying plane tickets or groceries. Airlines stated that this revenue has been more stable than ticket sales as demand for that has withered away.

TECH

IonQ, the Quantum-Computing Startup Plans Public Debut through SPAC Merger

The Quantum-computing IonQ Inc. plants to merge with blank-check firm dMY Technology Group Inc. III, making it the first publicly traded company specifically focused on commercializing quantum-computing hardware and software. On Monday, they stated its intention on filing paperwork in a week with the SEC to go public on the NYSE through a SPAC, valuing the combined entity at about $2 billion. IonQ is in hot competition with International Business Machines Corp., Microsoft Corp., Alphabet, and D-Wave Systems INC., to commercialize quantum computing using various approaches. As of today, there has not been a scalable, commercial-grade quantum computer on the market. It has been projected that by 2023, 20% of global organizations are expected to budget for quantum-computing projects, which is up form less than 1% from 2018. If IonQ’s deal goes through, it will have raised $734 million in funding since its founding in 2015, which includes $300 million through the merger with dMY Technology III and another $350 million in private investment funding from Hyundai Motor Co. Additionally, the company has raised $84 million in venture-capital funding.

COVID-19

CDC New Guidelines Direct Fully Vaccinated People Can Gather Privately Without Masks

The Centers for Disease Control and Prevention stated people who are fully vaccinate against the new coronavirus can gather privately in small groups without masks or physical distancing. The agency left its travel guidance unchanged, and said vaccinated people should continue to hold off on long trips. New cases, hospitalizations and deaths related to Covid-19 have fallen in recent weeks following a winter surge, but public-health officials say people should remain cautious. President Biden stated last week that the U.S. would have enough vaccines for all American adults by the end of May, and encouraged Americans to wear masks while some states have lifted restrictions. A person is considered fully vaccinated two weeks after receiving the second does of the two-shot vaccines made by Pfizer and Moderna, or after two weeks of receiving the Johnson & Johnson vaccine.

TECH

Pandemic Leading to a Surge in Day Trading, Making TikTok and Discord Users the New Wall Street Trading Desks

Through the pandemic, the influx of day trades have flooded social media sites as they help push stocks to record highs and turning companies into market sensations. Platforms such as TikTok, Twitter, YouTube, Reddit, Instagram, Facebook and Discord have become the “new Wall Street trading desks as retail investors gather to talk about hot stocks such as Tesla. More than talking about trades, they piggyback on each others’ ideas and trades, bringing momentum to dying stocks. Shares of Chinese electric-vehicle maker NIO Inc. are an example as the stock has received enduring interest from individual investors.

Many young investors on TikTok have been swamping the app with video snippets under the tag #nio with an accumulated 35 million views, as they question if it’s the new Tesla. On Twitter, it was mentioned nearly 6,800 times on a single day in November. Social media platforms have power to influence many, and new investors are not missing out. Young day traders state that they spend around 5 hours a day scrolling through TikTok, YouTube and other platforms for ideas on what to trade.

WORKS CITED

Abbott, Brianna. “CDC Says Fully Vaccinated People Can Gather Privately Without Masks.” Wall Street Journal, 8 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/cdc-says-fully-vaccinated-people-can-gather-in-small-groups-without-masks-11615219222.

Castellanos, Sara. “Quantum-Computing Startup IonQ Plans Public Debut in $2 Billion SPAC Merger.” Wall Street Journal, 8 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/quantum-computing-startup-ionq-plans-public-debut-in-2-billion-spac-merger-11615201201.

Frankl-Duval, Caitlin McCabe, Gunjan Banerji and Mischa. “TikTok and Discord Are the New Wall Street Trading Desks.” Wall Street Journal, 11 Jan. 2021. www.wsj.com, https://www.wsj.com/articles/tiktok-and-discord-are-the-new-wall-street-trading-desks-11610361004.

Hirtenstein, Ana. Stocks Diverge as Bond Yields Rise - WSJ. https://www.wsj.com/articles/global-stock-markets-dow-update-03-08-2021-11615192681?mod=hp_lead_pos1. Accessed 8 Mar. 2021.

Maidenberg, Micah. “American Airlines to Use Frequent-Flier Program to Raise $7.5 Billion.” Wall Street Journal, 8 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/american-airlines-to-use-frequent-flier-program-to-raise-7-5-billion-11615217163. 

Nereim, Vivian. “Saudi Arabian Oil Site Attacked, Stoking Regional Tensions.” Bloomberg.Com, 7 Mar. 2021. www.bloomberg.com, https://www.bloomberg.com/news/articles/2021-03-07/saudi-coalition-intercepts-five-drones-from-yemen-pursuing-more.

Parker, Will. “Manhattan Landlords Take Apartments Off Market During Rental Slump.” Wall Street Journal, 7 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/manhattan-landlords-take-apartments-off-market-during-rental-slump-11615140000.

Market Update (March 2)

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/.

Market Update (February 5)

Disappointing Job Results

January jobs report reflects a recovering, yet sluggish economy

The US Labor Department released the January jobs report, showing the US economy adding 49,000 jobs in the month of January and the unemployment rate falling to 6.3%, the first decrease in two months. This fell short of the 50,000 projected jobs gain, but it is a better than expected performance for the economy against the 6.7% unemployment rate projection. While this is positive news following the job losses incurred in December, Independent Advisor Alliance’s chief investment officer, Chris Zaccarelli has called these numbers “particularly underwhelming”. This jobs report only shows the public how fragile the US economy is at this moment and continued stimulus and cautious reopening of the private sector is still necessary. In spite of all this, investors are shrugging off the weak job results as they look forward to the likeliness of another stimulus relief bill.

Stock Market Hits Record Highs

Amid new potential stimulus, S&P 500 and Nasdaq indexes hit record highs

On Friday, the S&P 500 and Nasdaq indexes closed at record highs as the potential for another stimulus relief bill looms ahead. Friday morning, the US Senate approved a resolution allowing for the passage of a $1.9 trillion relief bill without any Republican support. This comes as news of another additional round of stimulus checks such as $1,400 per adult would be included in the new stimulus bill. It was an overall good day on Wall Street as oil and gold rose and the unemployment rate fell to 6.3%. Today’s gains gave the Dow Jones its best 5-day stretch since November, as the index ended the week up nearly 4%. Investors are feeling more confident about entering the stock market, following modest wage gains over the last month and the Federal Reserve holding rates steady at near zero levels. Corporate earnings have also boosted the market and investor sentiment as companies such as Apple and Microsoft have posted “stunning” results, with Apple earning over $100 billion of revenue over the 4th quarter for the first time. This has been an overall great week for the market and economists now may have to rethink their future economic projections.

COVID-19

Johnson & Johnson, AstraZeneca, & Covid-19

As we start the second month of 2021, Covid-19 still remains the number one issue. In spite of rising cases, progress is being made across the country as pharmaceutical companies Johnson & Johnson and AstraZeneca are moving ahead with their respective vaccines. Johnson & Johnson has officially requested the FDA to grant them emergency authorizations to approve, manufacture and distribute this vaccine, while studies on AstraZeneca show that its vaccine is able to protect against the new, more contagious variant of the virus found in the United Kingdom, also known as variant B.1.1.7. In addition, back home in the United States, the federal government is seeking to ramp up its vaccination efforts as the Pentagon will be deploying over a thousand active duty members to assist vaccination sites. Lastly, there is the increasing likeliness of a massive $1.9 trillion Covid-19 stimulus bill passing. News of these events have been largely influencing the markets these past few weeks, driving the major indexes up and this week and providing the Dow Jones with its best 5-day stretch since last November.

Works Cited

“CL.1: Crude Oil WTI (NYM $/Bbl) Front Month Overview.” MarketWatch, www.marketwatch.com/investing/future/crude%20oil%20-%20electronic.

“Market Summary – US Stock Market Overview.” MarketWatch, www.marketwatch.com/tools/marketsummary.

Monica, Paul R. La. “Stocks Rise Again Even as Jobs Report Shows Slow Recovery.” CNN, Cable News Network, 5 Feb. 2021, www.cnn.com/2021/02/05/investing/dow-stock-market-today-jobs-report/index.html.

Robbins, Benjamin Mueller and Rebecca. “Covid-19 Live Updates: AstraZeneca Shot Found to Be Protective Against Variant First Seen in U.K.” The New York Times, The New York Times, 5 Feb. 2021, www.nytimes.com/live/2021/02/05/world/covid-19-coronavirus.

“S&P 500, Nasdaq Close at Record Highs as $1.9 Trillion Stimulus Package Works Its Way through Congress.” Business Insider, Business Insider, markets.businessinsider.com/news/stocks/stock-market-news-today-record-highs-trillion-stimulus-moves-ahead-2021-2-1030049746.