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Adaptive Advice – Weekly Market Update: Market grinds higher to new records 12-Feb-21

October 01, 2021
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Most of the week’s index gains came on Monday, which was then followed by four days of relatively sideways price action. The Russell 2000 outperformed again with a 2.5% gain, the Nasdaq Composite rose 1.7%, the S&P 500 rose 1.2%, and the Dow Jones Industrial Average rose 1.0%. Each index set intraday and closing record highs this week.

The market remained supported by a fear of missing out on further gains, optimism surrounding another fiscal stimulus bill, better-than-expected earnings reports, and increasing COVID-19 vaccination rates and decreasing infection/hospitalization rates.

In addition, Treasury Secretary Yellen said the economy can reach full employment in 2022 if a stimulus bill is passed, and Fed Chair Powell reiterated that interest rates will remain near zero until the Fed achieves its dual mandate of maximum employment and a 2.0%+ inflation rate over time.

Energy, small-cap, and micro-cap stocks saw big gains, as risk sentiment broadened out. The S&P 500 energy sector rose 4.3%, and the Russell Micro-Cap Index rose 3.9%. The Philadelphia Semiconductor Index, however, was the biggest gainer with a 7.9% gain amid bullish analyst commentary surrounding NAND prices and a lingering acknowledgement that the industry is overwhelmed with demand.

Conversely, the utilities (-1.8%), consumer discretionary (-1.3%), and consumer staples (-0.1%) sectors were the lone holdouts this week.

Separately, more companies started to venture into the cryptocurrency space. Tesla (TSLA) disclosed a $1.5 billion investment in bitcoin with plans to accept the digital coin as a payment option, MasterCard (MA) said it plans to support cryptocurrencies on its payment network this year, and BNY Mellon (BK) reportedly said it will hold, transfer, and issue cryptocurrency for its asset-management clients.

The 10-yr yield increased three basis points to 1.20% amid an uptick in selling interest.

S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. It is not possible to invest directly in an index.

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