Improved Covid-19 Conditions And Stimulus Prove To Be A Tailwind For Many Sectors

March 15, 2021 11:55 AM
The Dow finished positive in 4 of 5 days on its path to setting 5 consecutive record highs last week
The Federal Reserve’s policy announcement this Wednesday highlights the week
A firm NY Fed Manufacturing beat expectations this morning
Equity Index futures

Equity Index futures

Last Week's Close

E-mini S&P 500 Futures (March): Settled at 3942.25, up 5.50 on Friday and 103.25 on the week

E-mini Nasdaq-100 Futures (March): Settled at 12,933.50, down 114.75 on Friday and up 269.75 on the week

U.S. benchmarks were little changed ahead of Monday’s opening bell. The easing of state and local restrictions coupled with Congress passing President Biden’s fiscal package has brought a continued tailwind to many sectors. 

Last week, the Russell 2000 finished positive each day on its path to successive record highs Thursday and Friday. The Dow finished positive in 4 of 5 days on its path to setting 5 consecutive record highs last week. The S&P nearly matched its February 16th record on Thursday (and again overnight today) and finished the week out with 4 straight days of gains. 

Tech has been the laggard, but stability and a consolidation higher from last Monday’s poor close has allowed other sectors to leap forward.

The Federal Reserve’s policy announcement this Wednesday highlights the week. Treasury Secretary Janet Yellen continued her inflation rhetoric over the weekend, saying “the risk of inflation is small and manageable.” She’s backed President Biden’s $1.9 trillion spending bill, calling it necessary, and adding she doesn’t expect mounting amounts of unprecedented debt to create persistent inflation. 

The committee will certainly address the inflation narrative. Remember, Fed Chair Jerome Powell believes any signs of inflation through reopenings are transitory. Last week’s CPI read was soft and continues to confirm the Fed’s outlook thus far.

Last night, a deluge of economic data out of China rebounded strongly from the pandemic-inflicted reads last February. The closely-watched Industrial Production came in at +35.1% versus +30% expected, however, Fixed Asset Investment’s +35% fell shy of the +40% expected. 

Elsewhere, Italy prepares for new lockdowns and a growing list of countries in the EU have suspended the use of AstraZeneca’s vaccine due to blood clot concerns.

A firm NY Fed Manufacturing beat expectations this morning at 17.40. This was its 2nd month in a row to beat and comes on the heels of 4 straight misses. Has manufacturing optimism turned a corner in New York?

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