Rollercoaster Week Leaves Major Benchmarks Struggling

The Federal Reserve is maintaining its dovish policy stance

Digital Content Manager
Mar 19, 2021 at 2:06 PM
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It was a week of highs and lows for Wall Street, with stimulus, the Federal Reserve's economic policy decision, and rising bond yields taking investors on a rollercoaster ride. The week kicked off on a positive note, with the Dow clawing back to seven-straight wins, as well as a closing high. Lifting investor sentiment was news that the Internal Revenue Service (IRS) had started processing the $1,400 stimulus payments. However, a number of European countries suspended AstraZeneca's (AZN) Covid-19 vaccine, keeping gains in check. Tuesday brought on headwinds, as investors held their breath over the Fed's decision, fearing interest rates would rise. In response, both the Dow and S&P fell from grace, despite the latter's intraday record.

Those fears eased on Wednesday, after the Fed confirmed there would be no interest rate hikes until at least 2023, with Fed Chair Jerome Powell noting that it would take a sustained move from inflation rates above 2% to alter the current dovish policy stance. The three major benchmarks soared, with the Dow and S&P 500 notching new record closes. However, surging bond yields re-stoked traders' fears on Thursday, forcing them out of growth-focused stocks. At its peak, the 10-year Treasury yield was above 1.75% -- its highest level since January 2020. In turn, the tech-heavy Nasdaq snapped a three-day win streak, and the Dow tumbled from yet another intraday high. Finally on Friday, stocks were mixed after the Fed's move not to extend the supplementary leverage ratio for banks. At last check, all three major indexes were headed for weekly losses.

Tech Segment Continues to Draw Attention

The tech sector was once again in the spotlight this week. Right off the bat, Micron Technology (MU) was struggling for direction, after it announced plans to sell its Utah factory that manufactures its 3D Xpoint memory chip. Meanwhile, cybersecurity name Crowdstrike (CRWD) was higher after its fourth-quarter earnings and revenue beat, which drew six price-target hikes. PayPal (PYPL) was also higher, though a recent dip placed it near a historically bullish trendline, which could soon push it closer to all-time highs. Electric vehicle name Nikola (NKLA) fell, however, after its strategic partner Hanwha said it would to sell up to half of a 5.65% stake in the company.

Reopening Stocks Making Headlines

With the Covid-19 vaccine rollout well underway, investors are eyeing stocks related to an economic reopening. Dollar General (DG) reeled in an upgrade to "overweight" from "neutral," with the analyst in coverage foreseeing a sales boost after another round of stimulus checks. Carnival (CCL) enjoyed a nice pop as well, when CEO Arnold Donald told the Financial Times the cruise company's full fleet could be sailing by the end of 2021. Similarly, AMC Entertainment (AMC) moved higher after reopening California locations this week. 

Gambling name Penn National Gaming (PENN) pulled back, though this dip may have positioned the equity for even more record highs in the near future. Lastly, MSG Networks (MSG) was higher after Bloomberg reported the company could merge with Madison Square Garden Entertainment (MSGE), reversing last year's split.

Final Full Week of March Brings Slew of Indicators

One year into the Covid-19 pandemic, the market has come a long way, with investors using economic indicators as a guidebook to assess progress since the lockdowns. Next week will be no different, with the latest round of jobless claims on tap, in addition to new and existing home sales, goods orders, and inflation data. The earnings confessional will be relatively quiet, though investors will still expect to hear from Adobe (ADBE), Carnival (CCL) and GameStop (GME), among others. While you wait, here is what to anticipate after a huge Russell 2000 Index (RUT) and S&P 500 Index (SPX) advance. Then, you can test the performance of stocks that gained while the SPX fell.    


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