Dow misses out on record high as Wall Street avoids back-to-back losses MarketWatch 1/12/2021
MARKET SNAPSHOT
U.S. stocks finished slightly higher Tuesday as investors weighed a further rise in bond yields and worries over the resurgence of of the COVID-19 pandemic against prospects for more economic aid from the incoming administration of President-elect Joe Biden and a 2021 economic recovery.
Stocks pulled back Monday after ending last week at record levels. The tech-heavy Nasdaq Composite led the way lower, falling 1.3%, while the Dow fell 0.3% and the S&P 500 declined 0.3%.
Stocks clung to gains as investors watched a rise in U.S. government bond yields this month. A Treasury market selloff saw the 10-year Treasury note BX:TMUBMUSD10Y recording its largest weekly rise since June in the past week and the spread between the 10-year and 2-year yields a measure of the yield curve briefly hit its widest levels since 2017.
Here’s what we’re watching ahead of the opening bell on Monday.
Futures tied to the S&P 500 slipped 0.9%, indicating the benchmark may fall from the all-time high it closed at on Friday. Contracts tied to the Nasdaq-100 edged 0.9% lower and those linked to the Dow Jones Industrial Average fell 0.9%.
Political rancor remains front and center, as the House may move to impeach President Trump as soon as this week.
What’s Coming Up Atlanta Fed President Raphael Bostic speaks on the economic outlook at 12 p.m., and Dallas Fed President Robert Kaplan speaks at a virtual town hall at 6 p.m.
Jan 8, 2021 17:47 GMTFXStreet News
The Dollar Index continues to flirt with the 90.00 level.
USD dynamics have shifted since the Democrats took control of Congress after winning both of Tuesday’s Senate elections in Georgia.
DXY recently broke above a two-month downtrend that started in early November.
The Dollar Index, a trade-weighted basket of major USD exchange rates (EUR/USD makes up about 50% of the index) and the market’s preferred gauge of USD sentiment, continues to flirt with the 90.00 level; the index saw momentary weakness heading into the final 4pm London Fix of the week, briefly dropping back below the psychologically important number but continues to trade close to highs of the day.
In 2019, we wrote about how
corporate share repurchases, or “stock buybacks,” had accounted for nearly all buying in the market. A year later, that significant support for asset prices has reversed.
While markets have certainly been on a tear this year, due to massive amounts of Federal Stimulus, it has been an advance solely on valuation expansion. While the decline in 2020 earnings was no surprise given the pandemic, earnings were already declining in 2019. The chart shows this in the
return attribution of the S&P 500.
Notably, while investors are willing to
“pay more for less” in earnings, revenue growth deteriorated more.