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Easing Restrictions, Stimulus Leads Markets Higher

Weekly Update – March 12, 2021

  • The S&P 500 index rose 2.6% last week to a record-high close as the consumer discretionary and real estate sectors led a broad climb.
  • The S&P 500 ended the week at 3,943.34, up from last Friday’s closing level of 3,841.94 and marking its highest closing level ever. The index set a fresh intraday high Thursday of 3,960.27 but failed to surpass that in Friday’s intraday trading. It is now up 5% for the year to date.
  • All of the index’s 11 sectors rose this week, led by jumps of 5.7% each in consumer discretionary and real estate. The materials and utilities sectors were also particularly strong, up 4.4% each. The weakest gain came from communication services, which edged up 0.7%.
  • The rally came as investors grew more optimistic for restrictions to continue to ease and the US economy to recover as President Joe Biden signed a $1.9 trillion COVID-19 relief package Thursday and then called on all states to make all adult Americans eligible for COVID-19 vaccines by May 1.
  • Also, while rising yields in recent weeks had prompted worries about rising rates, those concerns lessened as inflation data this week came in muted and within expectations.
  • The consumer discretionary sector’s gainers included the shares of Ross Stores (ROST) as the off-price retailer said it plans to open 60 new locations in fiscal 2021. The expansion plans come in contrast to the store closures being seen elsewhere in the retail space. Shares rose 8.4% from a week ago.
  • In real estate, the gainers included Ventas (VTR), whose shares climbed 2.6% on the week. Wells Fargo boosted its price target on the stock to $50 from $40 although its investment rating on the stock is still underweight.
  • In the materials sector, shares of Nucor (NUE) jumped 11% as the manufacturer of steel and steel products said it will build a $164 million tube mill in the Midwest, adding to its plate mill, galvanizing line and hot roll expansion. The company expects the mill to be in operation in two years. UBS increased its price target on the stock to $65 from $55 following the announcement. UBS continues to have a neutral investment rating on the shares.
  • Next week’s data highlights include February retail sales and industrial production Tuesday, February building permits and housing starts Wednesday, and weekly jobless claims and the Philadelphia Fed manufacturing survey Thursday.
  • Also next week, the Federal Reserve’s Federal Open Market Committee has a two-day meeting that will conclude Wednesday with an announcement by Fed Chair Jerome Powell.

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