The major indices finished mixed following another very active week of trading. Even though the Treasury market settled down and yields pulled back from their recent recovery highs, tech stocks remained under pressure. Following the inflation scare of the past few weeks, investors then turned their attention to the renewed spike in the number of global COVID cases, and while the U.S. outbreaks are still under control, the pandemic is far from being over. The virus remains the biggest risk to the economic recovery. With the domestic vaccine rollout still accelerating, the shares of most U.S.-focused companies enjoyed tailwinds even in the hardest-hit industries. Even the dollar hit a new four-month high in the face of the historic monetary and fiscal stimulus. The Biden administration’s infrastructure plan, which is rumored to be around $3 trillion, also made waves on the Street, as it seems likely that the Democratic Party will pass the bill.
This most recent week’s key economic releases showed signs of improvement compared to the weaker readings of the past few weeks, but the impact of February’s deep freeze was still apparent. The much lower-than-expected number of new jobless claims, the surprise upward revision of the fourth quarter GDP print, personal income, and the Richmond Manufacturing Index were the bullish highlights of the week, with the job market’s improvement being especially positive for the domestic outlook. On a negative note, the housing market’s slowdown has been confirmed again, as new and existing home sales both plunged, and the durable goods report, personal spending, and the manufacturing and services also missed expectations.
The short-term technical picture is mixed on Wall Street in wake of this week’s hectic sessions, with the Nasdaq still being the weakest link, but the bullish long-term trends are still in no danger. The S&P 500 and the DOW closed the week above their 50-day moving averages, and while the Nasdaq is still below its short-term indicator, the benchmarks are all above their rising 200-day moving averages. Small-caps experienced an ugly sell-off in the first half of the week, and even though the Russell 2000 recovered ahead of the weekend, it remains below its 50-day moving average, while still being well north of its long-term indicator. The Volatility Index (VIX) had another eventful week, as it spiked above 23 on Thursday, but closed below the key 20 level several times and finished near 19 on Friday.