Weekly Economic Update: Declining COVID-19 Cases; Fiscal Relief Bill

Presented by Nicholas Wealth Management

February 16th, 2021


Weekly Market Update

In this week’s recap: Vaccinations and declining case numbers result in economic optimism; Fed Chair says no change for now.


The Week on Wall Street

Stock prices inched higher last week amid declining COVID-19 cases, a pick-up in vaccinations, and progress on a fiscal relief bill.

The Dow Jones Industrial Average gained 1.00%, while the Standard & Poor’s 500 rose 1.23%. The Nasdaq Composite index climbed 1.73% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 1.80%.1,2,3


Stocks Post Gains

Stocks powered higher to begin the week, buoyed by rising confidence in economic recovery and the potential for another round of fiscal stimulus. Small cap stocks continued their 2021 rally as investors looked for out-of-favor names that might benefit from an economic rebound.

Stocks traded in a tight range through the remainder of the week. Investors appeared to digest current stock price valuations, wondering if the market had already “priced in” the optimism of a rebounding economy.

On Wednesday, Fed Chair Powell gave assurances that the Fed’s rate policy would remain unchanged for the foreseeable future. Some fear that inflation may pick up with broader reopening and additional fiscal stimulus.4

On Thursday and Friday, stocks drifted mostly higher in quiet trading, managing to set some new all-time highs.5 


Economic Expectations Rising

A survey by The Wall Street Journal showed increasing optimism among economists about economic growth for this year.6

Among the survey’s findings, economists, on average, now expect the economy to expand by 4.9%, an increase from their average estimate of 4.3% last month. They are, however, somewhat less sanguine about employment as they now expect 4.8 million jobs to be added this year, versus an earlier expectation of 5.0 million.6

Economists are forecasting accelerating inflation as a consequence of economic growth and fiscal stimulus, but believe that there is only a 17.5% probability of an economic downturn in the next 12 months, an improvement from its 21.2% risk estimate in January.6


Tip of the Week

A good will should propose at least a few executors, as there is always the possibility that your first choice for executor might not outlive you.


Media

What do flying taxis, Bitcoin, and biotech have in common?
They all may be major players when it comes to investing in the world of tomorrow. David Nicholas joined Fox Business‘ Charles Payne last Thursday 2/11 to discuss his thoughts.

We are all for helping the 10 million Americans who are out of work. But borrowing from China just to give Americans who have a job a $1,400 check does not make sense. David Nicholas joined Fox Business‘ Stuart Varney last Friday 2/12 to discuss why more stimulus is NOT the answer.

Be sure to subscribe to our YouTube page for all of David’s media commentaries if you are unable to watch them live CLICK HERE!



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CITATIONS:

1. The Wall Street Journal, February 12, 2021

2. The Wall Street Journal, February 12, 2021

3. The Wall Street Journal, February 12, 2021

4. Board of Governors of the Federal Reserve System, February 19, 2021

5. CNBC.com, February 12, 2021

6. The Wall Street Journal, February 11, 2021

David Nicholas

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