Monthly Market Recap: March 1, 2021

February Market Recap

March 1, 2021

Detective Chinatown 3, released in Chinese movie theaters in February, broke the record for the biggest opening weekend for a single country in box office history.

What do Chinese moviegoers have to do with a recap of markets? It’s an example of investors’ current focus: As the curtain begins to slowly close on COVID cases, the spotlight turns to people clamoring to leave their house and spend.

With vaccines rolling out across the US and hospitalizations down 64% since their January peak, investors are focusing on the reopening of the economy. While the 3 major indices were up in February, the reopening trade was reflected in what sectors outperformed. The S&P 500 Pure Growth Index (think stay-at-home stocks) was flat on the month while the S&P Value Index (think cyclical stocks) was up 10.61%. The pandemic’s worst sectors were February’s best: Financials (+11.49) and Energy (22.84%).

Index February 2021 YTD 2021
Dow +3.43% +1.41%
S&P 500 +2.76% +1.72%
NASDAQ +1.01% +2.47%

Small company stocks, viewed as more economically-sensitive than large company stocks, continued their recent outperformance and finished the month up 6.23%. International stocks finished up 2.26%.

Economic reports released in February provided further confidence in a strengthening economy. Retail sales blew past economists’ expectations, a 5.3% increase versus a consensus estimate of 1.2%. January new home sales were the highest January numbers in 15 years. Economists credited low rates and fiscal stimulus for the strong results.

And more stimulus looks to be coming. The House passed President Biden’s $1.9 million stimulus bill at the end of February. It makes its way to the Senate this week. Although the bills details may change, there is little doubt more money will land in consumers’ hands.

The bond market is a believer in the strengthening economy as treasury yields increased in February, which often coincides with economic expansions. In fact, the bond market thinks the economy might grow too hot. The 10-year treasury spiked to 1.6%, a one-year high and finished the month at 1.4%. The spike in bond yields spooked the stock market at the end of the month. With stocks bouncing near all-time highs, some investors found the higher rates attractive and sold stocks to buy bonds. The NASDAQ took the brunt of the selling and fell 4.92% the last week of February.

Some investors also worry the higher yields suggest higher inflation is imminent. Although inflation has shown up in certain areas and grabbed headlines, like lumber (+26% YTD) and gasoline (+40% YTD), overall or Core Inflation has remained stubbornly low and is well below the Federal Reserve’s 2% target.

 

 

 

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Marks Group Wealth Management performs in-house analysis on companies.  Statistical information on mentioned companies is obtained from company reports, news releases and SEC filings.  The information set forth herein has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and does not purport to be a complete analysis of the securities, companies or industries involved. Opinions expressed herein are subject to change without notice.  Additional information is available upon request.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments and strategies may be appropriate for you, consult with us at Marks Group Wealth Management or another trusted investment adviser.  Mention of individual equities in this commentary are for informational purposes only and are not intended to represent a recommendation.

Stock investing involves market risk including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. International and emerging market investing involves special risks such as currency fluctuation and political instability. These risks are often heightened for investments in emerging markets.  No strategy assures success or protects against loss.  Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Past performance is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

MSCI EAFE Index consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

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