Market Perspective for February 14, 2021

The Russell 2000 Index extended its lead in 2021 with an advance of 2.51 percent this week, the Nasdaq added 1.73 percent, the S&P 500 Index 1.23 percent and the Dow Jones Industrial Average 1.00 percent.

Disney (DIS) advanced 3.60 percent this week after it reported strong subscriber growth for its Disney+ streaming service. SPDR Technology (XLK) rose 2.42 percent with continued strong momentum. iShares PHLX Semiconductor (SOXX) jumped 7.83 percent. Holdings such as Applied Materials (AMAT) and Lam Research (LRCX) advanced 15.89 percent and 14.99 percent on the week.

Energy remained the best performing sector this year thanks to another big week for crude oil. SPDR Energy (XLE) climbed 4.97 percent as crude oil climbed 4.55 percent to $59.47 per barrel. Crude touched $60 on Friday. It has risen from $52 at the start of February.

The small busines confidence index fell to 95.0 in January, down from 95.9 in December. Analysts were looking for an increase, but lockdown policies in some states have kept uncertainty high for affected businesses.

Job openings held steady at 6.6 million in December. Economists predicted a small drop of 100,000 openings.

Headline consumer inflation increased 0.3 percent in January, while core prices were flat. Core inflation was in line with forecasts, but the consensus expected a 0.1 percent increase in core inflation.

Initial claims for unemployment held below 800,000, but only by 7,000 claims. Continuing jobless claims continued their decline, falling to 4.55 million in the week ended January 30, down from 4.69 million the week prior.

The University of Michigan’s advance reading of February consumer sentiment recorded a slight decline to 76.2 from 79 in January. Consumers concerns about the economy outweighed the prospect of stimulus. However, details of the stimulus bill only emerged this week and likely didn’t factor into the survey. Current plans would send $1400 checks per dependent, or $5,600 for a family of four, in addition to other measures. This would be a larger direct payment than in 2020 and that produced a large bump in economic growth and consumption for several months before trailing off as the year wore on.

The 10-year Treasury yield closed at 1.20 percent and near its high for the day. The move helped lift SPDR Financial (XLF) 2.01 percent. SPDR S&P Regional Banking (KRE) climbed 3.61 percent. Bonds headed in the other direction with iShares 20+ Year Treasury (TLT) sliding 0.63 percent on the week. iShares iBoxx High Yield Corporate Bond (HYG) gained 0.30 percent though, as credit risk keeps falling amid the strong and recovering economy.

Bumble (BMBL) had its debut on the Nasdaq this week, which included a surge of 63 percent on Thursday and then rising another 7 percent to close out its first trading week on Friday at $75.46.

Mohawk Industries (MHK) had a positive trading day with a significant increase of 5.99 percent in shares to $169.28 on Friday. It handily beat last quarter’s earnings projections and set a new company’s record for quarterly earnings. Net sales for the company were up over 9 percent on the quarter.

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