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Weekly Updates

Bond Market Shows Off Some Volatility, Investors Weigh in on Vaccine Distribution and New Variants

Weekly Update – February 26, 2021

  • The S&P 500 fell 2.45% this week, the market benchmark’s second weekly drop in a row, as every sector other than energy fell.
  • However, the market benchmark ended the last trading day of February with a monthly gain of 2.6% as its declines in the second half of the month failed to erase its gains in the first half.
  • The S&P 500 ended Friday’s session at 3,811.15, down from last week’s closing level of 3,906.71. It is now up 1.5% for the year to date.
  • The weekly drop came as investors continued to closely watch the race between COVID-19 vaccinations and the spread of variants that may be more resistant to existing vaccines. Total US deaths from COVID-19 surpassed 500,000 earlier this week, a harrowing milestone in the pandemic.
  • Also weighing on stocks, a jump in bond yields this week prompted investors to worry the Federal Reserve could boost rates sooner than expected.
  • The utilities sector had the largest percentage drop of the week, down 5.1%, followed by a 4.9% slide in consumer discretionary and a 4% slip in technology. Energy was the lone sector that bucked the drop, rising 4.3%.
  • CenterPoint Energy (CNP) was among the utilities sector’s decliners. The company reported Q4 adjusted earnings per share below the year-earlier period, although the adjusted EPS still beat analysts’ expectations and its revenue also topped the Street view. Shares fell 9.3%.
  • Also in utilities, shares of American Water Works (AWK) shed 9.4% despite better-than-expected Q4 earnings as the company’s revenue for the quarter missed the Street view. The midpoint of its guidance range for 2021 EPS also was slightly below analysts’ mean estimate.
  • The decliners in consumer discretionary included Best Buy (BBY) as the electronics retailer reported fiscal fourth-quarter sales below analysts’ expectations as same-store sales also missed the consensus estimate. While the company’s adjusted earnings per share for the quarter still beat the Street view, Chief Executive Corie Barry warned investors of “a high level of uncertainty related to the impacts of the COVID-19 pandemic.” Shares fell 15% on the week.
  • Among the technology sector’s decliners, shares of Leidos Holdings (LDOS) shed 15% as the company announced an agreement to acquire Gibbs & Cox, an engineering and design firm specializing in naval architecture and marine engineering, for $380 million in cash. Leidos also reported Q4 adjusted earnings per share above analysts’ expectations, but its revenue missed the Street view and its guidance for the new fiscal year’s adjusted EPS also came in below expectations.
  • On the upside, the energy sector’s advance came as crude oil futures also climbed. Among the gainers, shares of Marathon Oil (MRO) rose 17% on the week as the company reported a narrower-than-expected adjusted net loss for Q4 despite weaker-than-expected revenue.
  • As the calendar turns to March next week, February manufacturing data are due Monday from Markit and the Institute for Supply Management in addition to construction spending for January. However, the biggest focus will be on the February employment figures due later in the week, with monthly private-sector jobs data from Automatic Data Processing (ADP) expected Wednesday while Thursday will bring weekly jobless claims and Friday will feature the Labor Department’s nonfarm payrolls and unemployment rate for February.

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