Weekly Market Commentary 1/15/2021

-Darren Leavitt, CFA

Markets gave up a bit of ground last week as fourth-quarter earnings season kicked off and President-Elect Biden laid out his 1.9 trillion dollars economic stimulus plan.  Economic data was mixed but painted a picture for the need for more stimulus while the Fed pushed back on the notion that the Fed Funds would be raised anytime soon.

For the week, the S&P and NASDAQ lost 1.5%, the Dow shed 0.9%, and the Russell inked a 1.5% gain.  The yield curve was unchanged on the week.  The 2-year note and 10-year bond yields fell one basis point each to close at 0.13% and 1.09%, respectively.  Gold prices fell $8.70 to close at $1828 an oz.  Oil prices gained $0.13 or 0.3% to close at 52.38 a barrel.

Fourth-quarter earnings kicked off with the Financials.  Citibank, Wells Fargo, and JP Morgan all posted better than expected bottom-line results, but Wells Fargo missed revenue estimates.  Interestingly, the stocks sold off and perhaps indicated that the markets had already priced in these better than expected results.

President-Elect Biden showcased his 1.9 trillion dollars economic stimulus plan the week before his inauguration.  The plan includes another $1400 direct payment to individuals, $400 in supplemental unemployment benefits, $350 billion in state and local funding, and would increase the Federal minimum wage to $15/hr.  Markets also expect that Biden will take executive action on several Trump-era policies within his presidency’s first couple of days.

Retail Sales for December missed the mark coming in at -0.7 versus the estimate of -0.2.  Initial claims were up 185K to 965k versus the forecast of 780k and mark the highest level of initial claims since August 2020.  Continuing claims also regressed and were up 199k over the prior week to 5.271 million.  Industrial production increased 1.6% month over month and shows manufacturing continues to recover.

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