February 5, 2021 Weekly Market Recap

Investors buy the dip and propel market to new record highs.

The stock market rebounded swiftly from last week’s decline, with the S&P 500 finishing higher in all five sessions and ending the week with a 4.7% weekly gain. The Russell 2000 gained 7.7%, the Nasdaq Composite gained 6.0%, and the Dow Jones Industrial Average gained 3.9%.

February 5, 2021 Weekly Market Recap

All 11 S&P 500 sectors posted weekly gains, ten of which advanced between 2.3% (utilities) and 8.3% (energy). The health care sector (+0.5%) underperformed.

Positive factors this week included shares of GameStop (GME) mania subsiding, better-than-expected earnings reports, encouraging economic data, reports of increasing vaccination rates, and persistent expectations for additional fiscal stimulus. Alphabet (GOOG) and Amazon (AMZN) headlined this week’s earnings reports.

Economic data, good or not-so-good, was construed as positive for the market because 1) if it was good, it showed the economy was improving, which would suggest greater earnings potential and 2) if it wasn’t, it supported the thesis for additional fiscal stimulus. Such is life in a bull market.

The January ISM Manufacturing and Non-Manufacturing PMIs came above 50.0% (expansionary territory) for the eighth straight month. The labor market, on the other hand, remained sluggish, and the Congressional Budget Office said it doesn’t expect employment to recover to pre-pandemic levels until 2024.

Nonfarm payrolls increased by 49,000 following a 227,000 decline in December, while the unemployment rate improved to 6.3% from 6.7% in December.

The 10-yr yield increased eight basis points to 1.17% amid persistent selling pressure, as investors continued to bet on improved economic growth. The 2-yr yield decreased three basis points to 0.09%. The CBOE Volatility Index dropped 36.7% to 20.95, as investors dialed back hedging exposure.

Source: Briefing Investor

This entry was posted in Blog, Investing, Market Commentary by Mike Minter. Bookmark the permalink.

About Mike Minter

Mike develops investment portfolio allocations, handles trading and rebalancing, and conducts research and analysis as a Portfolio Manager and Financial Advisor for the firm. As a perpetual student of investing and the markets, Mike considers himself obsessed with the subject. Mike has earned the CERTIFIED FINANCIAL PLANNER™ (CFP®) and Certified Fund Specialist® designations. He is also an active member of the Houston chapter of the Financial Planning Association (FPA).   Read Mike's Profile HereRead More Articles by Mike

Mike Minter

Mike develops investment portfolio allocations, handles trading and rebalancing, and conducts research and analysis as a Portfolio Manager and Financial Advisor for the firm. As a perpetual student of investing and the markets, Mike considers himself obsessed with the subject. Mike has earned the CERTIFIED FINANCIAL PLANNER™ (CFP®) and Certified Fund Specialist® designations. He is also an active member of the Houston chapter of the Financial Planning Association (FPA).

Read Mike's Profile HereRead More Articles by Mike

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