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Bob Carey
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  US Stock Markets Ended Jan. 8, 2021
Posted Under: Weekly Market Commentary

 
Equity markets surged higher on expectations that Washington DC is poised to deliver more financial stimulus. The Senate runoff races in Georgia were both won by Democrats and they have been promising $2000 stimulus checks to a large portion of the U.S. population. As a result, inflation expectations and a potential rise in economic activity fueled the S&P 500 index to a 1.59% gain last week. Cyclicals led the way as Energy, Materials and Financials were the top three sectors. Oil rallied to over $50 for the first time since last February on news that Saudi Arabia decided to cut oil production as inventories are falling. Last week, four of the top ten performing stocks in the S&P 500 were energy names. They were up an average of 19.31% with oil servicing company TechnipFCM PLC up 24.46% as the top performing Energy name. With the cyclical rally, value trounced growth as the S&P 500 Value index was up 2.35% and the S&P 500 Growth index managed only a 0.37% return. Tesla Inc. returned 24.70% last week which pushed its market cap to $834b, 5th largest in U.S. names passing Facebook Inc. This week's rally also pushed Tesla Founder/CEO Elon Musk to the top of the world wealth list with $209b, passing Amazon.Com Inc Founder/CEO Jeff Bezos who is worth a meager $186b. Walgreens Boots Alliance Inc. announced 4Q earnings and revenue higher than analyst estimates. Walgreens also announced a plan to sell their Alliance Healthcare wholesaling business to AmerisourceBergen Corp. for $6.5b. Walgreens is seeking a business restructuring after losing half of its market cap over the last few years. Looking ahead to next week, we remain constructive on equities. News headlines on the size of Government stimulus will likely push stocks higher or lower. The 10-year Treasury went from 92bps to 112bps last week and as stimulus expectations grow its likely that inflation and interest rate expectations will grow in lockstep. Equities have historically been a very strong inflation hedge and we believe that will continue.
Posted on Monday, January 11, 2021 @ 8:36 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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