This was a volatile week for the markets, ending with a mixed picture, with SP500 closing at 3842, up 0.8%, Dow up 1.8% to 31496 and NASDAQ down – 2.1% to 12920.
The smaller companies were similar to large caps with mid cap SP400 up 0.7% and small cap SP600 up 1.8%.
For the past 3 months, SP500 is up 3.9%, Dow up 4.2%, NASDAQ up 3.7%, SP400 up 11.9% and SP600 up 20.0%
Over the last 6 months, SP500 up 12.1%, Dow up 12.0%, NASDAQ up 14.2%, SP400 up 32.4% and SP600 up 46.0%
In past year SP500 is up 29.3%, Dow up 21.8%, NASDAQ up 50.7%, SP400 up 39.8% and SP600 up 50.2%
For the broad market indices, ODW has been best over the past 3 months and NASDAQ over the past 6 and 12 months. Based on market cap, the small cap SP600 did best over the past 3, 6 and 12 months.
For the SP sectors, the past week saw XLB (materials) up 2.3%, XLC (communications) up 2.5%, XLE (energy) up 10.0%, XLF (finance) up 4.3%, XLI (industrial) up 3.1%, XLK (technology) down – 1.3%, XLP (staples) up 2.2%, XLRE (real estate) down – 1.3%, XLU (utilities) up 2.2%, XLV (health) up 0.4% and XLY (discretionary) down – 2.7%
For 3 months XLB up 4.9%, XLC up 9.6%, XLE up 30.5%, XLF up 16.2%, XLI up 4.7%, XLK up 2.4%, XLP down – 4.3%, XLRE down – 1.3%, XLU down – 4.3%, XLV up 0.4% and XLY down – 0.8%
Over 6 months XLB is up 16.9%, XLC up 18.8%, XLE up 51.9%, XLF up 33.2%, XLI up 20.1%, XLK up 9.2%, XLP down – 1.2%, XLRE up 1.4%, XLU up 0.5%, XLV up 6.9% and XLY up 6.5%
In the past year XLB up 40.8%, XLC up 47.4%, XLE up 24.7%, XLF up 31.6%, XLI up 28.8%, XLK up 45.1%, XLP up 5.2%, XLRE down – 4.4%, XLU down – 11.0%, XLV up 16.3% and XLY up 36.7%.
The relative performance of the sectors was 1 week XLE best and XLY worst, 3 months XLE best and XLU worst, 6 months XLE best and XLP worst and 12 months XLK best and XLU worst.
News on the economy started the week well with the Purchasing Manager’s Index from ISM up for the ninth consecutive month. The February figure was up by 2.1% to 60.8. Construction spending was up by 1.7% in January, and up 5.8% from January 2020. The ISM Services Sector report was still good at 55.3, although down from the January 58.7 figure. Factory orders were up 2.6% in January after a 1.6% increase in December. All of these reports are signs of a recovering economy.
The ADP private sector employment report was disappointing at 117,000 jobs, well below the expected 225,000 and down from a revised January figure of 195,000. All of the gains were in services as manufacturing employment dropped. Weekly unemployment claims were 758,000, up 32,000 from the previous week, while continuing claims were slightly lower at 4.3 million. On Friday, the government reported a gain of 379,000 jobs, above the estimated 225,000, and a drop in the unemployment rate form 6.3% to 6.2%. While encouraging, the unemployment pre-pandemic was 3.5% and there are still 9.5 million fewer jobs than one year ago.
Consumer borrowing dropped by 1.3 billion, the first time in five months. The drop in August was 9 billion. Credit card use decreased to its lowest level since January 2017 and this offset increased auto and student loans.
The market turbulence this week seemed to be centered on concerns about inflation. Signs of increased prices came from both the manufacturing and services segments of the Purchasing Manager’s Index from ISM as well as higher oil prices and last month’s increase in the Producer Price Index. The strong economic reports also contributed to the worry that the economy will grow quickly as the pandemic subsides with increased vaccinations. While Fed emphasized that the expected short term increase in inflation would not result in increased interest rates, investors were not convinced that inflation would be transient. As a result, yields on Treasuries reached the highest since February 2020 at 1.551%. The were wild swings in the markets this week, with the NASDAQ briefly dropping more than 10% from its February high, before a surge in cyclical stocks ended the week.
Stock Wealth Safely this week
QSR both reached its 5% target 4 weeks after selection while the SPX dropped – 3.8% over the same period. The new selections this week were AMGN and CVS.
The Stock Wealth Safely approach results in consistent stock market returns.