Rate rerun

  • Climbing yields trip up stock rally; oil and energy slide
  • Dow, S&P 500, Russell set new records before pulling back
  • This week: More IPOs, housing numbers, final Q4 GDP

In what has become a familiar refrain in the US stock market, optimism about an economic rebound appeared to do battle last week with fears about rising interest rates and inflation.

This time rate fears gained the upper hand, at least temporarily. The S&P 500 (SPX) rang up more record highs but still lost ground for the week as another spike in long-term rates pressured stocks on Thursday and broke the market’s two-week win streak:

Chart 1: S&P 500 (SPX), 1/11/21–3/19/21. S&P 500 (SPX) price chart. Another rate-surge pullback.

Source: Power E*TRADE

The headline: Fed stays the course, markets remain jittery.

The fine print: Last Wednesday’s Federal Open Market Committee (FOMC) announcement revealed the Fed was upping its US economic outlook, was still nowhere near hiking interest rates, would continue its bond-buying stimulus program, and wasn’t worried about inflation. The SPX reversed an intraday loss to close at a new all-time high.

The move: One day later the 10-year T-note yield made its third-biggest daily increase of the month, hitting a 14-month high of 1.754%.

The scorecard: Nasdaq 100 (NDX) slipped back into the red for the year, but the Russell 2000 (RUT) took the biggest hit last week:

US stock index performance table for week ending 3/19/20. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE

Sector roundup: The strongest S&P 500 sectors last week were communication services (+0.6%), health care (+0.4%), and consumer staples (+0.3%). The weakest sectors were energy (-7.6%), financials (-1.7%), and information technology (-1.3%).

Highlight reel: Rubius Therapeutics (RUBY) +84% to $32.9 on Monday, Celsius Holdings (CELH) -22% to $47.37 on Thursday.

Futures action: May WTI crude oil (CLK1) tanked 7.5% on Thursday, falling to a five-week low of $58.28/barrel before bouncing more than 2% on Friday to close at $61.44. April gold (GCJ1) extended its quiet rally off its March 8 low, closing last week modestly higher at $1,741.70/ounce.

Last week's biggest futures up moves: June palladium (PAM1) +10.7%, May corn (ZCK1) +3.5%, April pork cutout (KMJ1) +3.4%. Last week's biggest futures down moves: April heating oil (HOJ1) -7.3%, May Brent crude oil (BK1) -6.6%, April WTI crude oil (CLJ1) -6.3%.

Coming this week

This week brings more housing data and the final Q4 GDP reading:

Monday: Chicago Fed National Activity Index, Existing Home Sales
Tuesday: Current Account Q4, New Home Sales
Wednesday: Durable Goods, Core Capital Goods Orders
Thursday: GDP (Q4 final)
Friday: Personal Income and Spending, PCE Price Index (core inflation), Goods Trade Balance, Wholesale Inventories, Consumer Sentiment (final)

This week’s earnings include:

Monday: SYNNEX (SNX), Ebix (EBIX)
Tuesday: Adobe (ADBE), GameStop (GME), Paychex (PAYX)
Wednesday: Cassava Sciences (SAVA), General Mills (GIS), KB Home (KBH), RH (RH)
Thursday: Progress Software (PRGS), Momo (MOMO)

This week IPOs include:

Tuesday: Universe Pharmaceuticals (UPC)
Wednesday: DigitalOcean (DOCN), ACV Auctions (ACVA), Leonardo DRS (DRS)
Thursday: Vizio Holding (VZIO), Diversey Holdings (DSEY), SEMrush (SEMR), Cricut (CRCT)

Go to the E*TRADE market calendar for an up-to-date earnings schedule and complete list of splits, dividends, IPOs, and economic reports. The Active Trader Commentary also lists earnings announcements, IPOs, and economic report times each morning.

Market Mover Update: The SPX fell 2.2% from Wednesday’s close to Friday’s low after the Cboe Volatility Index (VIX) pattern outlined in VIX dips and market slips,” but rallied to close Friday near breakeven for the day.


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