Markets rose, as did COVID cases last week. What is pushing the market higher?
Monday
The week kicked off much the way it had ended the week before. The Nasdaq lagged the trend lower as COVID vaccinations were hampered by weather disruptions.
Tuesday
The day brought a stark reversal from Mondays directionality. Leadership shift back to value stocks, led by energy, materials, and financials. An encouraging piece of data is that capacity utilization increased more than expected. As we move past the holiday season it will be important for us to see this number increase. This will show that companies are rebuilding inventories.
Wednesday
Markets were fairly muted for most of Wednesday. Late in the day equities lifted on a press conference from the Federal Reserve Board (FRB) Chair Powell. He indicated the FRB bond purchasing will remain aggressive until substantial fiscal support is provided. The news brought a more optimistic market response.
Thursday
Although there was no stimulus deal or Brexit deal, markets rose as though they had come to an agreement. Reaching new highs, markets were reacting on reports that a stimulus package was near the finish line. They were also reacting to no news from the EU, which has many believing a deal is near. This, on a day where initial jobless claims increased again to a level above expectation.
Friday
The close of the week brought a soft market on the day. They rebounded into the close to end up only being down 0.36% on the S&P 500. Markets were underwhelmed as they awaited a stimulus deal from Washington and FDA approval of Moderna’s vaccine.
Conclusion
The S&P 500 added 1.25% for the week. Optimism continued as the markets have now priced in both stimulus and vaccine approval. Brexit remains an outlier to market success as arguments remain over fishing grounds. Moderna’s vaccine approval and stimulus agreements did come over the weekend, which should buoy market sentiment.
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