Week of March 1, 2021

Rough sailing in the U.S. equity markets last week, with all three major stock indices dropping after seeing strong gains earlier in the month.  On the week, the Dow and S&P 500 lost 1.7% and 2.5%, respectively.  The tech-heavy NASDAQ dropped more than 4% with its worst one-day sell-off last Thursday.  For the month of February, the Dow gained 3.15% for its third positive month in four in February, and the S&P 500 and NASDAQ gained 2.61% and nearly 1%, respectively.

Stocks were pressured last week by rising interest rates as the yield on the 10-year Treasury jumped to 1.6% last Thursday, igniting fears of inflation and continued rising interest rates.

 U.S. equities rose sharply this morning as Treasury yields retreated from their highs last week, with the yield on the 10-year Treasury dropping to 1.43%. In early trading, the Dow was up more than 500 points and the NASDAQ gaining more than 200.  “Equity investors are still looking at the rise in rates mostly as ‘a good thing’ and not yet as a threat notwithstanding some shaking of the tree in high multiple stocks and other parts of the market last week,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.  The benefits of vaccines vs the challenge if higher rates will be the theme this year.”

Sentiment was boosted when the Centers for Disease Control (CDC) and Prevention advisory board voted unanimously last Sunday to recommend the use of Johnson and Johnson’s one-shot COVID vaccine for people 18 years and older.  The company expects to ship up to 4 million doses in its initial delivery.  Cases of reported COVID infections, hospitalizations and deaths have been on the decline for weeks as a turning point against the virus may be upon us.