Markets “In a Nutshell” for February 9, 2021
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 3.89%, the S&P 500 rose 4.65%, the New York Stock Exchange Composite (2,000 stocks) rose 4.67% and the average investors index (Value Line Index) was up 6.10%. Foreign stocks (DJ Global ex U.S.) were up 3.65%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 8 basis points higher at 1.19%. (Data source: Wall Street Journal)
Tech Leads Rebound
Led by technology stocks, the market returned to positive territory last week after a tumultuous previous week that may end up being the outlier for the year. Much of the gains for the past week can be attributed to the spectacular 4th quarter earnings reports for tech companies, in particular Amazon and Google parent company, Alphabet. Also contributing to the optimism last week was a progression in talks for a massive stimulus bill that newly inaugurated President Biden would like to pass to jumpstart his administration. The “deficit hawks” that were center stage following the 2008-09 Financial Crisis, who worried about the amount of government debt that would be added, have all but disappeared as bipartisan support seems attainable, although with Democrats essentially in full control, bipartisanship isn’t completely necessary. No bill is expected to be passed in the next couple of weeks, but enough progress and political will has been shown for markets to begin to predict its passage sooner rather than later. (Barron’s)
Exxon & Chevron Talks Surface
News of a potential merger between two of the biggest oil companies in the world emerged last week, a combination that would create an over $300 billion company and the 2nd biggest oil company in the world, behind Saudi Aramco. While the news is only of preliminary talks and any deal is far from certain, the merger would be a monumental change for the global oil sector and would follow a devastating year for nearly all energy companies. Exxon just last week reported its earnings and showed the company had suffered over $20 billion in losses. (Barron’s)
Gamestop in Freefall
As a follow up to last week’s irrational market action, Gamestop’s stock ended last week falling over 80% for the week, with other stocks like movie theater operator AMC falling 49%. While Treasury Secretary Janet Yellen met with regulators to determine if any action was needed in response to the events last week, it seems that the short squeeze movement of online traders has already passed us by and hasn’t caused any deeper issues within financial markets. (Barron’s)
According to S&P Global, how many corporate bankruptcies were announced in 2020?
Have a Great Week!
3. S&P Global reported that there were 610 corporate bankruptcies in 2020, the most since 2012. (Barron’s).