Last Week Recap:
Stocks sold off sharply the last week of February, S&P 500 -2.45%, Dow -1.78%, Nasdaq -4.92%, Russell 2000 -2.90%. The sell off was primarily driven by the recent surge in interest rates impacting growth stocks the most. However, other interest rate sensitive sectors such as utilities and consumer discretionary both fell roughly 5%. Energy was one of the only winners as oil rose above $64. In fact, energy was up 22.5% for the month. Fed Chair Jerome Powell speaking to the Senate Banking Committee, reassured that the central bank was in no rush to raise interest rates or begin trimming it's $120B in monthly bond purchases. He stated that the recent rise in yields is attributable to the markets confidence in a continued recovery from the pandemic. Last week President Biden also signed an executive order mandating a review of U.S. supply chains, focused on semiconductors, key minerals and materials, active pharmaceutical ingredients and advanced batteries. The pandemic exposed the U.S. reliance on certain items that are critical to public health, defense, etc, and there is strong bipartisan support to find ways to protect and strengthen American competitiveness. Johnson & Johnson also received emergency use authorization over the weekend for it's vaccine. JNJ claims to deliver 100M doses by the end of June. Economic data also exceeded expectations. Housing data continued to be strong, unemployment claims fell and durable goods orders rose.
The Week Ahead:
Interest rates are likely to continue to be a focal point to investors but futures point to a strong open as interest rates are coming down slightly. It is the first trading week of April, and April has historically been one of the best months of the year for stocks. Also, over the weekend the House approved the $1.9B stimulus package and it is expected to pass the Senate. This week we will get the monthly jobs report and data on both manufacturing and non-manufacturing PMIs.
Sources: SeekingAlpha, StockTwits, TD Ameritrade.