Market Perspective for March 23, 2021

A dip in bond yields boosted technology stocks on Monday as trades are still reacting to interest rate changes. The 10-year Treasury yield closed at 1.68 percent on Monday.

The S&P 500 rose 0.70 percent on the day, the Nasdaq 1.23 percent and the Dow 0.32 percent. However, the Russell 2000 small-cap index was slightly down for the day after a recent streak of gains with a loss of 0.91 percent on Monday.

Tech stocks led the week with a boost as Apple (APPL) shares closed up 2.83 percent at $123.39 and Microsoft (MSFT) 2.45 percent at $235.99. SPDR Technology (XLK) climbed 1.97 percent on Monday. Invesco QQQ Trust ETF (QQQ) increased by 1.75 percent. Innovator IBD 50 (FFTY) was also up by 0.2 percent for the day.

SPDR Consumer Staples (XLP) increased 1.06 percent and SPDR Healthcare (XLV) 0.87 percent.

SPDR Financial (XLF) fell 1.29 percent on Monday, and SPDR Energy (XLE) 0.96 percent. The former had been rising with interest rates and the latter with inflation expectations. Over the past six weeks alone, XLF had risen 18 percent and XLE 35 percent at its peak, compared to only 4 percent for the S&P 500 Index.

For major banks, JPMorgan Chase (JPM) shares decreased 2.69 percent on Monday to close at $150.97. Likewise, Goldman Sachs (GS) shares decreased 1.41 percent to close at $339.33.

Crude oil prices saw a slight lift Monday with an increase of 0.08 percent to $61.47 a barrel.

Lower rates boosted bonds across the board. iShares 20+ Year Treasury (TLT) gained 1.11 percent, iShares iBoxx High Yield Corporate Bond (HYG) 0.36 percent, iShares iBoxx Investment Grade Corporate Bond (LQD) 0.36 percent and Fidelity Corporate Bond (FCOR) 0.38 percent.

Monday’s Federal Reserve data on major bank lending for the past month revealed that home loans and commercial loans hit record-lows as a percentage of banks’ total assets. U.S. major banks remain cash-rich, and the total assets of the 25 largest banks in the U.S. rose by 0.8 percent.

Tesla, Inc. (TSLA) shares gained 2.31 percent on Monday to close at $670.00, after intraday highs of above 6 percent gains on news of raised targets on Tesla share prices based on significant opportunities for the electric automaker in the autonomous driving subsector.

Industrials performed well for the day. Kansas City Southern (KSU) was a frontrunner on Monday with a share surge of 11.12 percent to close at $249.09 after Canadian Pacific Railway (CP) publicized the acquisition of the U.S. company, which represents the highest-valued Canadian purchase of an American corporation ($25 billion) over the past five years.
The US Dollar Index Spot was up throughout the day with an overall increase of 0.09 percent to around 91.84.

Data released from the National Association of Realtors (NAR) on Monday showed a decline of 6.6 percent in existing home sales for last month. This was below the consensus expectation for February of only 2.8 percent of a drop. A shrinking inventory of existing homes listed on the market accounts for some of the cooling off in sales from previous months while still surpassing pre-pandemic figures.

For the week ahead, the Treasury will auction two-, five- and seven-year bonds. Personal income and spending levels for February are due out on Friday. The U.S. Energy Information Administration will release crude oil supply updates on Wednesday. Jerome Powell, Chairman of the Fed, and Janet Yellen, Treasury Secretary, testify on their department’s pandemic policies in a joint appearance this Tuesday.

The flash manufacturing and services PMIs are expected to show improving economic conditions in March. On Thursday, the Bureau of Economic Analysis’ third estimate of fourth quarter GDP should be in line with the prior estimate of 4.1 percent.

Companies reporting earnings this week include General Mills (GIS), KB Home (KBH), Adobe Systems (ADBE), Darden Restaurants (DRI) and Seabridge Gold (SA).

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