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Real Estate and Consumer Staples Lead the S&P Higher

Weekly Update – March 26, 2021

  • The S&P 500 index rose 1.6% last week amid signs of progress in the economy and COVID-19 vaccine distribution.
  • The market benchmark ended the week at 3,974.54, up from last week’s closing level of 3,913.10. With just three sessions left to the month and quarter, the index has risen 4.3% in March to date and is up 5.8% for the first quarter to date.
  • On the upside this week, economic data including weekly jobless claims showed improvement while U.S. President Joe Biden doubled his administration’s vaccine goal for his first 100 days in office to 200 million.
  • Interest rates, however, have been climbing, prompting worries they could put a dent in the economic recovery. Newly reported COVID-19 cases are back on the rise in a number of states after having plateaued. The total number of US cases since the pandemic began topped 30 million this week.
  • The real estate sector had the largest percentage increase of the week, up 4.3%, followed by consumer staples, up 3.9%. Just two sectors ended the week in the red: communication services, which fell 1.9%, and consumer discretionary, which edged down 0.2%.
  • The real estate sector got a boost from American Tower REIT (AMT), Crown Castle International (CCI) and SBA Communications (SBAC) as KeyBanc Capital Markets upgraded its investment ratings on the trio to overweight from sector weight, saying it sees the “Big 3” tower operators benefiting from an improving 5G environment. Shares of American Tower rose 7.6% on the week while Crown Castle added 4.6% and SBA Communications climbed 6.2%.
  • In consumer staples, shares of JM Smucker (SJM) rose 1.7% as Credit Suisse boosted its price target on the stock and the food products company unveiled a strategic partnership with JDE Peet’s for its Smucker Away From Home liquid coffee business.
  • The decliners in communication services included ViacomCBS (VIAC), whose shares plunged 50% even as S&P changed its outlook on the company to stable from negative amid an equity offering. MoffettNathanson downgraded its investment rating on the stock to sell from neutral while slashing its price target on the shares and warning clients the media conglomerate faces potential risks as the media industry continues to shift premium content to direct-to-consumer platforms.
  • Next week, companies scheduled to release quarterly financial results include McCormick (MKC) and Chewy (CHWY) on Tuesday, Walgreens Boots Alliance (WBA) on Wednesday, and CarMax (KMX) on Thursday.
  • Economic data next week will be heavily focused on the labor market. The ADP employment report for March is due Wednesday, followed by weekly jobless claims Thursday and monthly nonfarm payrolls Friday. The monthly report will be released Friday despite the US stock market being closed that day in observance of the Good Friday holiday.

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