Markets “In a Nutshell” for January 26, 2021
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 0.59%, the S&P 500 rose 1.94%, the New York Stock Exchange Composite (2,000 stocks) rose 0.39% and the average investors index (Value Line Index) was up 0.99%. Foreign stocks (DJ Global ex U.S.) were up 1.23%. Bond prices were higher for the week, with the 10-year U.S. Treasury ending the week 1 basis point lower at 1.10%. (Data source: Wall Street Journal)
Markets Return With Positive Week
Markets returned to their positive momentum this week as technology and small cap stocks led the way higher. As now President Biden was sworn in during the week, hopes for another stimulus bill kept the market grinding higher, even though the timeline for a new deal seems to have moved further back. The new administration has also set a 100 million vaccination goal for the country after a lackluster beginning of a rollout so far. What has been more detrimental, according to the World Health Organization, has been the struggle for poorer countries across the globe to gain access to vaccines and may hinder the world’s progress in opening each countries’ economies and the consequences could continue to affect the U.S. economy indirectly for longer than hoped. (Barron’s)
Technology Stocks Surge
The largest technology companies that were some of the biggest beneficiaries of the stay at home lockdowns that persisted for much of the last year have generally sat out of the recent rally that has taken hold since the announcement of a vaccine in early November. That changed last week in a significant way, especially after Netflix reported strong 4th quarter earnings and subscriber growth that fueled a rally in other big technology companies. Facebook, Amazon and Alphabet, parent company of Google, all rose over 8% for the week and led the entire technology sector up over 5%. Small cap stocks have also been rising furiously, as those companies may be the biggest beneficiaries of the vaccine rollout. Currently, with vaccines being deployed and interest rates at all-time lows and expected to be there for some years, the stock market is in a particular goldilocks period that is driving the stock market higher, but any wrong turns in that narrative could spell a terrible result for stocks. (Barron’s)
How much debt does the U.S. government have as a percentage of Gross Domestic Product, the most widely used measure of the U.S. economy??
Have a Great Week!
3. The U.S. Government … after a tumultuous economic year that required an unseen amount of government assistance … has now accumulated an exact amount of debt as the size of the entire U.S. economy. (Barron’s).