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There were no bombs this year. Powell managed to offer investors exactly what they wanted to hear – that the Fed is likely to stop buying bonds by the end of the year, but interest rate hikes aren’t going on for very long. The market gathered.
It was a strong decision for last week. The
rose 1.5% to 4509.37, a record while
Dow Jones Industrial Average
335.72 points or 1% to 35,455.80 and
rose 2.8% to 15 129.50, the highest ever. Prolonged sleep
rose 5.1% to 2277.15 and now looks like it has room to run.
Of course, it wasn’t just Powell. The week began with the development of a vaccine
(ticker: PFE) and
(BNTX) is getting full approval from the FDA, which hopes more people will be vaccinated. The growth in the number of Covid cases, although continuing, has slowed significantly and should start to decline in the coming weeks. Economic data were broadly stable, unemployment benefits remained low and second-quarter GDP growth was revised upwards. The massacre in Afghanistan depended on emotion, but the market rose past it.
The fact that investors are once again waiting for a new second round of trading was clear for rally-type – and declining – stocks.
(PTON) fell 8.6% on Friday after a fourth – quarter fiscal report revealed a larger – than – expected loss, a sign that the deal will close. The
Energy Selection Area SPDR
However, the ETF (XLE) rose 7.4%, the highest gain since May, when oil rose 11%. Banks are also bouncing
The ETF (KBE) rose 3.7%, the best week since August 6th. These stocks could continue to thrive in the market if growth in the Covid cases continues to slow.
“This may encourage the expansion of the share price and the second action to open the trade seen in the first quarter of 2021,” writes Charlie Toole, Adviser Investments ’portfolio manager. “When the slowdown is evident, the opening stocks are already on the rise.”
That doesn’t mean there aren’t risks. As last week’s decline shows, the market can turn quickly — and often for no apparent reason, ”writes Gonzalo Asis, a stock-linked analyst at BofA Securities. The fact that sales ended so quickly only increases the likelihood that the next one, whenever it arrives, could be even more violent. “Sales have come and gone, and stocks back to new highs will only encourage more investor behavior, which historically precedes major fragility disruptions,” Asis explains.
And it is true, tapering or not conical.
Write Ben Levisohn at [email protected]