Stock Market News: 02-27-21
Dividend Investing, Medium-Term Horizon, Value
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Robert Hauver, MBA, was VP of Finance for an industry-leading corporation for 18 years, and publishes SA articles under the name DoubleDividendStocks. TipRanks rates DoubleDividendStocks in the Top 25 of all financial bloggers, and Seeking Alpha rates us in the Top 5 of several categories, including Dividend Ideas, Basic Materials, and Utilities.
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Summary
- The VIX rose 26.7% this week, ending at $27.95.
- The Energy sector continued to lead this week, rising 4.27%, and is up 27% year to date, leading all sectors by a wide margin.
- The market was down this week, with all 4 indexes losing ground. The NASDAQ lost -4.92%.
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Market Indexes: The market was down this week, with all 4 indexes losing ground. The tech-heavy NASDAQ lagged, losing -4.92%, as investors continued to move out of big cap tech stocks, in the wake of rising Treasury yields. The Russell small caps lost over -3%, the S&P lost -2.45%, and the DOW fell -1.78%.“U.S. Treasury yields rose to fresh one-year highs this week. The yield on the 10-year U.S. Treasury note broke above 1.45% for the first time since February 2020 on Thursday, adding to recent advances.” (Yahoo)
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Volatility: The VIX rose 26.7% this week, ending at $27.95.
High Dividend Stocks: These high dividend stocks go ex-dividend next week: WSR, ABR, BURCA, GBDC, LUMN, OMP, RTLR.
Market Breadth: 7 out of 30 DOW stocks rose this week, vs. 12 last week. 36% of the S&P 500 rose, vs. 53% last week.
FOREX: The US $ rose vs. most major currencies this week, as the Treasury yield curve steepened.
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Economic Reports: “Initial claims for state unemployment benefits fell 111,000 to a seasonally adjusted 730,000 for the week ended Feb. 20, the lowest level since November. Economists polled by Reuters had forecast 838,000 applications in the latest week.” (Reuters)
“Dallas Federal Reserve President Robert Kaplan on Monday repeated that he expects the U.S. economy to grow at about a 5% pace this year, but added that he could be underestimating the strength of the post-pandemic recovery.Americans will “gradually” engage more fully in the economy between now and June as coronavirus vaccines are rolled out, Kaplan predicted in an International Energy Forum, and “we think we see substantial improvements in mobility and engagement in the third quarter and fourth quarter.”“If we are wrong, the risks are to the upside – we may grow faster,” Kaplan added. Unemployment, now at 6.3%, will “meaningfully” decline, and inflation will firm, he said. (Reuters)
“Sales of new U.S. homes rose in January by more than forecast to a 3-month high as buyers took advantage of attractive mortgage rates that are now starting to increase.Purchases of new single-family homes increased 4.3% to a 923,000 annualized pace in January from an upwardly revised 885,000 rate in the prior month, government data showed Wednesday. The median forecast called for an 856,000 pace. The median sales price rose 5.3% to $346,400 from a year earlier, the highest for any January on record.Historically-low mortgage rates helped fuel a housing boom last year when many Americans sought more space, with homes serving as offices and classrooms during the pandemic. The demand surge has left inventories lean and driven up prices, threatening to cool momentum just as borrowing costs begin to ratchet higher.At the same time, builder backlogs remain elevated and indicate residential construction will stay firm in coming months and contribute to economic growth.” (Bloomberg)
“Federal Reserve Chair Jerome Powell has tried to temper market participants’ increasing fears over higher inflation and rates during his semi-annual testimony before Congress this week. He reaffirmed his view that upward pressure on prices in the coming months would be transitory, and that the U.S. economy still required policy support to emerge from the coronavirus pandemic.“It seems pretty clear to us that the move in rates has been driven by growing optimism about economic growth, and rates are finally ‘catching up’ to the bullish growth outlook in equities. So equity investors should not be overly concerned,” UBS strategist David Lefkowitz wrote in a note.“But can rates rise too much before it begins to become a headwind for stocks? In theory, yes, but typically only if the rise in rates begins to choke off economic growth, perhaps because the Federal Reserve is worried about inflation,” he added. “With the pandemic winding down later this year, massive pent-up consumer demand (close to USD 2 trillion of excess savings by consumers), more fiscal stimulus on the way, and the Fed keeping the pedal to the metal, it’s hard to see the recent rise in rates having a material drag on economic growth.” (Yahoo)
(MarketWatch)
Week Ahead Highlights: The Non-Farm Payrolls report for February and the latest Unemployment Rate will be released on Friday.
Next Week’s US Economic Reports:
(MarketWatch)
Sectors: The Energy sector continued to lead this week, rising 4.27%, and is up 27% year to date, leading all sectors by a wide margin. The Consumer Discretionary and Utilities sectors lagged.
Futures: WTI Crude rose 3.97% this week, ending at $61.66, after reaching above $63.00 on Wednesday and Thursday.
Analyst's Disclosure: I am/we are long CCD, CC.
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