On Monday trading at the US stock market was not held due to the celebration of Presidents Day.
On Tuesday the market was predominantly negative, although financial stocks Morgan Stanley (MS), Goldman Sachs (GS), JPMorgan Chase & Co. (JPM), Citigroup (C) and Bank of America (BAC) rose as 10-year US Treasury yields hit their highest levels since late March. Oil companies ExxonMobil (XOM) and Chevron (CVX) also rallied after oil prices jumped to a 13-month high. Investor interest in shares of companies in economically sensitive sectors was driven by expectations that the approval of additional fiscal stimulus in the United States and active vaccination will help to quickly restore the world's largest economy. In addition, optimism was underpinned by encouraging fourth-quarter corporate reporting data. According to Refinitiv, after the publication of reports of more than 75% of the S&P 500 components, analysts predict that the profit of the companies that make up this index in the fourth quarter will show an increase of 3.5% compared to last year, while at the end of the current quarter it will show an increase of 21.1 %.
Similar dynamics continued on Wednesday. Investors focused on the Fed meeting minutes, which reported that policymakers generally agreed on the need to maintain very low interest rates for the foreseeable future and continue buying bonds to support the labor market recovery. Central Bank officials expected the federal aid package approved in December and progress on Covid-19 vaccinations would help improve the outlook for the economy. Some of them noted that inflation may accelerate in the coming months, but expressed doubts that price pressures would be sustained enough to necessitate a monetary tightening. In addition, a Commerce Department report showed that retail sales rose a seasonally adjusted 5.3% last month. December data was revised to show a 1.0% decline in sales from 0.7% as previously reported. Economists forecasted a 1.1% rise in retail sales. The increase in consumer spending is expected to affect inflationary expectations, which have recently led to a significant increase in government bond yields.
The next day the market saw a moderate decline. According to a Labor Department report, the number of Americans who first applied for unemployment benefits rose unexpectedly last week. It also noted that initial claims for unemployment benefits were 861,000 on a seasonally adjusted basis for the week ending February 13, up from 848,000 in the previous week. Economists forecasted 765,000 applications. In part, the increase in the number of requests may be due to the temporary closure of car factories, which began last week due to a shortage of semiconductor chips in the world. A Commerce Department report showed that US housing construction fell more-than-expected in January. According to the report, the number of new homes commissioned last month fell 6.0% to 1.580 million on a seasonally adjusted basis per year. Economists predicted that the number of new homes in January would fall to 1.658 million units. On an annualized basis, the volume of housing construction fell by 2.3%. At the same time, the number of home construction permits rose by 10.4% to 1.881 million units in January.
The week ended with predominant growth. Last night, US Treasury Secretary Janet Yellen told CNBC that a large fiscal stimulus package is still needed to fully recover the economy. She added that the approval of Biden's proposed $ 1.9 trillion aid package. could help the US return to full employment in a year. Market participants also focused on IHS Markit data, which showed that business activity in the US private sector recorded the strongest monthly growth in almost six years in February. The preliminary composite PMI, which tracks manufacturing and services, rose to 58.8 from a final reading of 58.7 in January. This marked the steepest growth since March 2015.
