Markets “In a Nutshell” for February 24, 2021
Investment Week at a Glance
Stocks finished mixed for the week. The Dow Jones Industrial Average was up 0.11%, the S&P 500 fell 0.71%, the New York Stock Exchange Composite (2,000 stocks) fell 0.04% and the average investors index (Value Line Index) was down 0.06%. Foreign stocks (DJ Global ex U.S.) were up 0.17%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 14 basis points higher at 1.34%. (Data source: Wall Street Journal)
Stocks Fall for the Week
Stocks mostly, but only slightly, fell for the week as cold temperatures swept across the nation and particularly damaged the state of Texas, leaving millions without power for days. While stocks seemed largely unaffected by the frigid weather, the unpreparedness highlighted the need for upgraded infrastructure across the country and sparked more talks about an infrastructure bill, even as the ongoing discussions are just now ramping up for another stimulus bill. There was some good economic data reported last week with consumer spending rising for the first time in three months, but the news was soured by another rise in initial unemployment claims that continues to hamper the recovery in the jobs market. (Barron’s)
Small Cap Stocks Continue to Surge
Small Cap stocks have been on an incredible streak so far in 2021 and have continued a trend that started late last year as increased government spending and the opening of more states’ economies support the previously badly beaten down stocks of small companies. The Russell 2000, the most widely used index to track Small Cap stocks, is up almost 15% so far this year and more than 35% from its peak before the pandemic started almost exactly one year ago. Given the underperformance of the asset class prior to the pandemic, Small Cap stocks could see further room to continue their meteoric rise as larger technology stocks that have led the market for over a decade have begun to stagnate and even pull back in recent days. (Barron’s)
Quiz:
How much have Small Cap stocks, tracked by the Russell 2000 Index, outperformed Large Cap stocks, tracked by the S&P 500, over the past 6 months? (Scroll Down for Answer)
Answer below.
Have a Great Week!
Answer:
c. Small Cap stocks have outperformed Large Cap stocks by about 30% in the past 6 months. (Wall Street Journal).