Weekly Economic Update: Positive COVID-19 News Signals Optimism for Markets

Presented by Nicholas Wealth Management

February 8th, 2021


Weekly Market Update

In this week’s recap: The markets went back to basics this week, showing optimism for positive COVID-19 news.


The Week on Wall Street

Stocks notched strong gains last week, paced by a string of solid economic reports and consensus-beating corporate earnings.

The Dow Jones Industrial Average gained 3.89%, while the Standard & Poor’s 500 advanced 4.65%. The Nasdaq Composite index jumped 6.01% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, climbed 1.96%.1,2,3


Bull Story Remains Intact

As the social media trading frenzy fizzled, investors were able to focus on more fundamental issues, like economic data and a fresh batch of corporate earnings. Pleased by an economy that appeared to be growing stronger, coronavirus cases in decline, and an improving vaccine rollout, investors bought stocks with enthusiasm.

The rally last week was broadly based, with the Energy, Financial, Communication Services, and Technology sectors posting gains.

The stock market’s optimism on an improving economy was seconded by the bond market as the 30-year Treasury rate rose to nearly 2.0% by Friday. When yields rise, bond prices fall. Falling bond prices may indicate that investors are less interested in Treasuries and more interested in other investments that benefit from a stronger economy. Rising yields may also reflect worries that a growing economy may spark inflation that may lead the Fed to rethink its zero-rate policy.4


The Inevitable Denouement

It was just two weeks ago that a social media chat forum appeared to contribute to a buying frenzy in a handful of struggling companies, unsettling Wall Street and capturing the nation’s attention.

These stocks staged a broad retreat last week as more was learned about the trading activity.

A similar social media-inspired buying effort was also initiated on silver. But silver prices experienced a modest gain before quickly reversing direction just days later.5


Tip of the Week

Take a look at your insurance policy and read the fine print about progressive illness in case you or a loved one are one day diagnosed with Alzheimer’s Disease, Parkinson’s Disease, or other forms of neurological disease.


Media

Reddit users know exactly what they are doing. They are willing to lose everything as long as a strong message is sent to hedge funds. David Nicholas joined Fox Business’ Charles Payne last Monday 2/1 to discuss this fascinating story and more!

Many Reddit users aren’t buying GME and AMC solely to make a profit. One Reddit user shared how his Dad lost everything in the 2008 financial crisis. He bought a couple of shares to send a message to the hedge funds. David Nicholas joined Fox Business’ Stuart Varney last Tuesday 2/2 to discuss the latest GameStop news!

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 5, 2021

2. The Wall Street Journal, February 5, 2021

3. The Wall Street Journal, February 5, 2021

4. The Wall Street Journal, February 5, 2021

5. CNBC, February 4, 2021

David Nicholas

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