Markets “In a Nutshell” for February 16, 2021
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 1.00%, the S&P 500 rose 1.23%, the New York Stock Exchange Composite (2,000 stocks) rose 1.99% and the average investors index (Value Line Index) was up 2.77%. Foreign stocks (DJ Global ex U.S.) were up 2.30%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 1 basis point higher at 1.20%. (Data source: Wall Street Journal)
Stocks Continue Rising
All 3 major stock indexes, the S&P 500, the Dow Jones Industrial and the Nasdaq, all hit record highs last week, as cases of COVID-19 continue their rapid decline nationwide and stimulus efforts carry on with an increasing likelihood of passage in the coming weeks. House Democrats released their version of a $1.9 trillion bill, including direct payments to individuals and an increase of the minimum wage to $15 an hour over a period of four years. It is still unclear whether the minimum wage piece of legislation will actually make it to the final bill, but government estimates have already been released on the possible effects of the increase. The Congressional Budget Office estimated that the wage increase would result in a raise for 27 million workers and lift 900,000 people out of poverty, but result in over 1.4 million jobs lost and accelerate an already deep government budget deficit. The pros and cons of the minimum wage discussion has been at the center of many economists’ research, but real world examples have been limited to specific areas and is difficult to compare to a nationwide increase. The topic will certainly be debated vigorously as long as it is being included in the bill and is one of the many issues that will have to be resolved to get a bill passed. (Barron’s)
COVID-19 Cases Plunge Nationwide
As the holiday season is now further in the rearview mirror, COVID-19 cases have fallen roughly 56% over the past month, while hospitalizations have fallen 38%. Over 35 million vaccinations have also been administered, adding up to over 10% of the population. As a result, the Center for Disease Control has begun to urge schools nationwide to reopen K-12 schools and issued further guidelines on how to do so safely. A continuation of this trend and further progress in reopening the economy is crucial to getting back to pre-pandemic levels of employment and to truly beginning the economic recovery that so many need. (Barron’s)
What has been Small Cap stocks return year-to-date as of Friday, as tracked by the Russell 2000 Index?
Have a Great Week!
4. The Russell 2000 Index, the most commonly used index to track Small Cap stocks, is up 16% so far this year, compared to the S&P 500’s return of 5%. (Morningstar).