Weekly Market Update | March 1, 2021
The Week on Wall Street
Stocks dropped amid rising long-term bond yields, with sharp declines in high-valuation growth stocks leading the overall market lower.
The Dow Jones Industrial Average slipped 1.78%, while the Standard & Poor’s 500 declined 2.45%. The Nasdaq Composite index, home to many high-valuation growth plays, fell 4.92% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged up 0.37%.
Rising Rates Derail Stocks
The 10-year Treasury yield climbed last week, from 1.34% to 1.42%, sending shudders through the stock market. While investors generally understand that economic strength may lead to higher bond yields, it was the speed at which bond yields rose that proved unsettling. Generally, when yields rise, bond prices tend to fall.
Rising yields also drove sector rotation, with economic reopening stocks (e.g., energy, financials, and industrials) outperforming stay-at-home stocks, especially many of the big technology names.
The trend of higher yields was mitigated by testimony on Tuesday and Wednesday by Fed Chair Jerome Powell. He provided some assurances that the Fed remained committed to its current easy money policy stance.
A surge in yields on Thursday, however, sparked a new wave of anxiety and a broad retreat that left market averages lower for the week.
Powell Testimony Calms Investors
Concerns over rising long-term bond yields and inflationary pressures were eased by two days of testimony by Fed Chair Powell. Powell reiterated the Fed’s intention to stick with its near-zero short-term interest rate policy and monthly bond purchase program until the labor market fully recovers and its inflation goals are met.
Powell dismissed market fears of accelerating inflation, noting that he did not see inflation reaching any troubling levels, declaring that any increase would be modest and transitory. He added that the Fed would likely allow inflation to spend some time above its 2% target rate. Inflation for the past eight years straight has been below that target.
Key Economic Data
Monday: Institute for Supply Management (ISM) Manufacturing Index.
Wednesday: Automated Data Processing (ADP) Employment Report. Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims. Factory Orders.
Friday: Employment Situation Report.
Source: MarketWatch Calendar
Companies Reporting Earnings
Monday: Zoom Video Communications, Inc. (ZM).
Tuesday: Target (TGT), Ross Stores, Inc. (ROST).
Wednesday: Okta, Inc. (OKTA), Marvell Technology Group (MRVL), Dollar Tree, Inc. (DLTR).
Thursday: Broadcom, Inc. (AVGO), Costco Wholesale Corp. (COST), Kroger (KR).
Sources: The Wall Street Journal, February 26, 2021; Treasury.gov, February 26, 2021
Weekly performance for the Dow Jones Industrial Average, Standard & Poor’s 500 index, and NASDAQ Composite is measured from the close of trading Friday, February 19 to Friday February 26, close. Weekly performance for the MSCI-EAFE is measured from Friday February 19, open to the Thursday February 25, close. Weekly and year-to-date 10-year Treasury note yields are expressed in basis points.
Finding Inner Peace Inside (and Indoors)
Practiced for thousands of years, yoga has had a revival in the last couple decades. Yoga can be an optimal exercise choice for many individuals of all ages. But before getting started with any fitness regimen, make sure to discuss any medical concerns with your healthcare provider; this information is not a substitute for medical advice.
While there are many different styles of yoga, generally speaking, yoga is a low-impact form of exercise. But in addition to the fitness benefits, it can help you learn relaxation and breathing techniques as well as how to regulate emotions and quiet your mind. It’s also a great form of exercise to do indoors, and there are thousands of free classes on YouTube So, if you’re still enduring the remnants of winter, you can practice “quieting your inner monologue, doing yoga from the comfort of your own home.
Tip adapted from Healthline.com
Peach Mango Smoothie
- 1 small frozen peach, diced
- 1 small frozen banana, cut into chunks
- 1 frozen mango, diced
- ¼ cup plain or vanilla yogurt (coconut, soy, or dairy all work)
- ½ cup almond milk (or any milk of your choosing)
- Honey or cinnamon for garnish (optional)
- Remove pre-sliced frozen fruit from the freezer and place in a blender with all other ingredients. Blend until the mixture is smooth, serve and enjoy!
Recipe adapted from foodandnutrition.org
Sing with an Anti-Slice Grip
If you slice, it’s probably because you’re not closing the clubface fast enough through the hitting zone. To improve your ability to deliver a square clubface (relative to your path), make practice swings with your hands split apart on the grip.
Hold the club in its normal position with your gloved hand, then slide your lower hand down to where the grip meets the shaft. Separating your hands like this makes it easier to square the face through impact and keep the handle pointing at your belly button as the clubhead slings out toward the ball. Make sure to brush the grass aggressively. If you can recreate the feels in the drill on real swings, you’re money.
Tip adapted from golf.com
4 Facts About Capital Gains
When you sell a capital asset like an investment or a piece of property, the sale can result in a capital gain or loss. The IRS defines a capital asset as “most property you own for personal use or own as an investment.” Here are four facts you should keep in mind:
- A capital gain or loss is the difference between what you originally paid for the asset (your basis) and the amount you get when you sell an asset.
- You must include all capital gains in your income and you may be subject to the Net Investment Income Tax if your income is above certain amounts. Consult a qualified tax expert for help.
- The IRS allows you to deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.
- If your total net capital loss is more than the limit you can deduct, you can carry it over to next year’s tax return.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov
Photo of the Week
Elephants at sunrise near Mt. Kilimanjaro, Tanzania
Financial planning and investment advisory services offered through Cleveland Wealth, LLC, a Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified wealth advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.