Week In Perspective: The return of the mega-caps [22-Jan-21]

Updated: 22-Jan-21

A weekly recap of market activity and events, featuring commentary, analysis written with individual investors in mind.

Week in perspective provided by Briefing.com. Briefing.com offers live market analysis on their web site www.Briefing.com

The shortened trading week featured renewed strength in the mega-cap stocks, which drove the outperformance of the Nasdaq Composite (+4.2%) and lifted the S&P 500 (+1.9%) and Dow Jones Industrial Average (+0.6%) in the process. Including the Russell 2000 (+2.2%), each index set new record highs.

Namely, Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG), and Facebook (FB) rallied between 6-9% this week amid positive-minded analyst recommendations and an appreciation from Netflix's (NFLX) earnings report that these companies still have serious earnings potential. NFLX shares surged 13.5%.

The iShares US Home Construction ETF (ITB, +8.9%) and Philadelphia Semiconductor Index (+2.7%) were other pockets of strength. Together, the mega-caps, homebuilding stocks, and semiconductor stocks lifted the S&P 500 communication services (+6.0%), information technology (+4.4%), and consumer discretionary (+3.1%) sectors to the top spots. 

Homebuilding stocks rallied around positive housing data, including one report that featured the strongest pace of housing starts since September 2006.

Conversely, the financials (-1.8%), energy (-1.6%), and materials (-1.2%) sectors cooled off amid profit-taking interest, with the financials sector unable to gain traction from a host of better-than-expected earnings reports. 

In Washington, Joe Biden was inaugurated as the 46th president and signed several executive orders to aid the fight against the coronavirus, and Treasury Secretary nominee Janet Yellen asserted that it's time to "act big" on fiscal stimulus. Republican lawmakers, however, pushed back on President Biden's $1.9 trillion stimulus proposal.

The 10-yr yield decreased one basis point to 1.09% in a quiet week for Treasuries. 


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