Indexes Log Volatile Week 1 Year After Pandemic Bottom

A global uptick in Covid-19 infections weighed heavy on investors' minds

Digital Content Manager
Mar 26, 2021 at 2:46 PM
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It was a volatile week for Wall Street, with the one-year anniversary of the pandemic bottom, a global uptick in Covid-19 infections, and vaccine updates holding the spotlight. Things were off to a good start on Monday -- the 10-year Treasury yield tumbled, helping the tech sector move higher. Also boosting investor sentiment was the accelerated pace of vaccine programs in the U.S., and AstraZeneca's (AZN) encouraging trial results. In turn, Wall Street's "fear gauge," the Cboe Volatility Index (VIX), fell to an annual low and logged its ninth loss in 10 sessions. However, sentiment took a turn on Tuesday, which marked one year since the pandemic wreaked havoc in the market. Traders moved to take profits from reopening stocks, as virus variants led to a rising number of cases across the globe. Meanwhile, U.S. Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen reinforced the central bank's monetary policy. 

Stocks extended their losses on Wednesday, as the global tally of coronavirus cases surpassed the 124 million mark. All three major benchmarks were lower, while the VIX logged back-to-back wins for the first time since March 4. Thursday was spent mostly in the red as well, though stocks managed to pivot higher by the end of the session thanks to retreating bond yields. Finally on Friday, the Federal Reserve announced financial institutions could resume buyback programs and raise dividends by late June, giving sentiment a boost. Better-than-expected consumer sentiment data also helped stocks, as did the core personal consumption expenditure price index. At last check, both the Dow and S&P 500 were staring at weekly wins, though the tech-heavy Nasdaq was on track for a loss.

Bullish Sentiment Towards Tech Names

A handful of tech names made headlines this week. Social media giant Snap (SNAP) was among them, after it flashed a bull signal that may help it move closer to its record highs. Blue-chip Microsoft (MSFT) was also turning heads, with options traders blasting the stock after reports the company is in talks to buy videogame chat platform Discord. Similarly, streaming giant Netflix (NFLX) attracted options bulls after a lofty upgrade from Argus Research, which praised the company for its popular original content and global expansion. The same cannot be said for Adobe (ADBE), which moved lower despite a slew of bull notes and upbeat first-quarter forecast.

Reopening Stocks Continue to Draw Attention

Stocks that depend on the reopening of the economy also captured investors' attention. For one, JetBlue (JBLU) took a tumble this week, after announcing a convertible debt deal. Another airline name that was front and center was Southwest Airlines (LUV), after one analyst called it "one of the best low-cost carriers." Meanwhile, Burger King parent Restaurant Brands International (QSR) had technical support in place, and could soon benefit from a short squeeze. Finally, Darden Restaurants (DRI) was higher, after the Olive Garden owner reported better-than-expected fiscal third-quarter earnings and revenue.

Holiday-Shortened Week Packed Full of Economic Indicators

The upcoming week will be a short one, with markets closed on Friday in observance of the Good Friday holiday, but it will leave nothing to be desired in terms of economic data. Investors will be bidding goodbye to March as they sift through the Case-Shiller national home price index, more unemployment numbers, the Markit manufacturing purchasing managers' index (PMI), and the ISM manufacturing index. As far as earnings, they will be looking ahead to reports from Chewy (CHWY), Lululemon (LULU), and Walgreens Boots Alliance (WBA), to name a few. Get ahead of next week's events by diving into why Wall Street's "fear gauge" could see even more March madness, and take a deeper look into the S&P 500's performance one year after the Covid-19 bottom.

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