Market Perspective for March 9, 2021

The Dow Industrials hit a new all-time high on Monday as strength in materials, finance and industrials powered the index. Selling in popular technology stocks also continued. The Dow gained 0.97 percent and the Russell 2000 Index advanced 0.49 percent. The S&P 500 Index fell 0.54 percent and the Nasdaq slid 2.41 percent.

Utilities, financials, and materials were the S&P 500 sector leaders for the day, as information technology and communication services trailed.

SPDR Utilities (XLU) gained 1.41 percent on Monday, SPDR Materials (XLB) 1.34 percent, SPDR Financial (XLF) 1.28 percent, and SPDR Industrial (XLI) 1.05 percent. SPDR Communication Services (XLC) declined 1.34 percent and SPDR Technology (XLK) 2.42 percent.

As one of the major recent additions to the index, Tesla (TSLA) shares took a hit of 5.84 percent for Monday.

Disney (DIS) share increases led the way for the Dow as the company saw a spike of 6.27 percent on the day to close at $201.91. California state officials announced that Disney parks could begin opening for the public as soon as this April, which was encouraging news for potential revenue recoveries sooner than expected.

Value finished reversing its pandemic underperformance, as measured by a pair of Invesco ETFs. Invesco S&P 500 Pure Growth (RPG) rose as much as 30 percent from the start of the pandemic (as measured by the highest price in late February). Invesco S&P 500 Pure Value (RPV) was still nursing losses into February. As of today, RPG’s gains are down to 12.11 percent, while RPV is up 14.20 percent.

Continued progress towards economic reopening fueled daily gains for airline companies as well. United Airlines (UAL) and Southwest (SW) shares rose 7 percent and 6.4 percent, respectively, on Monday. In addition, shifting plans toward a return to office workspaces in the near term drove a 6.83 percent increase for shares of commercial office building landlord Vornado Realty (VNO).

Apple (APPL) declined 4.17 percent on Monday as part of the larger investor rotation away from growth-heavy stocks towards value. Although Apple shares have seen a 63.5 percent increase on the year, they are down more than 11 percent after Monday from the start of the year. Downward pressure on growth-centered stocks like Apple is being driven by higher interest rates.

On Monday, West Texas Intermediate crude oil prices dropped slightly by 0.5 percent to close at $64.75 per barrel for the day. Oil prices temporarily saw a jolt from Sunday attacks on Saudi Arabian oil sites, but concerns over the impact on supply quickly resolved after the production was unaffected. SPDR Energy (XLE) rose 0.12 percent. Through Friday’s close, crude had rallied $20 per barrel in 2021.

Gold prices closed at $1,678.80 an ounce on Monday after a slight loss of 1.16 percent or $19.70 on the day.

The 10-year Treasury note yield ended at 1.59 percent for Monday after an increase of 4.2 basis points. This marked the highest closing percentage for the 10-year yield over the past 12 months. Fidelity Corporate Bond (FCOR) slid 0.72 percent, iShares iBoxx High Yield Corporate Bond (HYG) 0.73 percent, and iShares iBoxx Investment Grade Corporate Bond (LQD) 0.93 percent.

The U.S. Dollar Index looks to have begun its rally with another gain of 0.57 percent. It has turned positively against the euro, yen, and Chinese yuan. iShares MSCI EAFE (EFA) slid 0.35 percent on the day, while iShares MSCI Emerging Markets (EEM) declined 2.69 percent. Chinese tech stocks dominate the top holdings in EEM. iShares China Large-Cap (FXI) fell 3.52 percent.

The Commerce Department reported Monday that wholesale inventories rose 1.3 percent on the month for January in line with consensus projections. The 4.9 percent increase in January sales for wholesalers, well beyond the 0.9 percent consensus expectation, indicates that consumer demand for goods is significantly rising alongside optimism over improving pandemic conditions.

On Monday morning, the Federal Reserve confirmed a three-month extension of the Paycheck Protection Program to June 30, 2021, as opposed to March 31. This extension applies to loans sought by small businesses through the short-term liquidity program, but the existing March 31 deadline will apply as the Fed previously established for additional emergency pandemic facility programs due to lower overall demand for those programs.

The National Federation of Independent Business will release its small-business confidence index today. Analysts believe confidence rose in February.

Consumer price inflation will be out on Wednesday. Economists project 0.4 percent headline inflation last month, with a 0.2 percent rise in core CPI. Producer prices are out on Friday; economists see a 0.4 percent increase.

The University of Michigan’s advanced consumer sentiment survey for March comes on Friday. Analysts expect it will show rising optimism.

The House of Representatives may vote today on the latest version of the highly-anticipated stimulus package, which would include an additional $300 weekly in extra federal unemployment support until September, $350 billion earmarked for state and local support, and direct payments of $1,400 to U.S. adults, which would be phased out per stricter income benchmarks. If the Senate’s latest version of the stimulus bill passes the upcoming House vote as expected on party lines, then President Biden would face pressure to sign the final bill before federal unemployment benefits are set to expire on March 14.

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