Market Outlook - January 2021
Stock Market
In the worst weekly selloff since October, the markets were down across the largest global indices. The S&P 500 declined 3.29%, the Russell 200 lost 4.38%, and the NASDAQ was down 3.48%. The international developed markets index (MSCI EAFE) dropped 3.45% and the emerging markets index (MSCI EM) lost 4.44%. By sector, real estate and utilities were the best performers while energy and materials were the laggards.
The week was marked by the funneling of abundant money into speculative – highly shorted – shares of a handful of stocks promoted by individual traders on an online website and then bought way out of proportion with normal trading in those names (and subsequently restricted from some trading services). These stocks have displayed extraordinary volatility and have reminded some of the early days of the internet era.
Fixed Income
The Federal Reserve Board met last week and agreed to leave interest rates unchanged near zero and will continue to buy bonds at a rate of $120 million per month. The board noted that the pace of economic activity will depend significantly on the course of the coronavirus, including progress on vaccinations. Interest rate changes were minor across the 2-year, 10-year and 30-year treasuries, but the yield curve steepened last week.
Commodities
Silver (SIVR), a Precious Metals strategy holding, is outperforming the markets as global stimulus is projected to stir economic growth. Fifty percent of normal silver is demand is derived from industrial applications (including solar panels and electronic devices) which are economically and environmentally sensitive. Shares of SIVR were up 5.5% last week.
Economic Data
New orders for durable goods edged up 0.2% in December, below expectations for a 0.8% gain held back by aircraft orders that were well below expectations. Business investments (non-defense ex-aircraft) rose by 0.6%
Home prices rose 9% in November on a year-over-year basis, according to the Case Shiller index. This marks an acceleration from the 8% annual rate in the prior month for the key 20 city price index. Phoenix, Seattle and San Diego led the pack with gains in the low-teens.
Source: Gradient Investments
If you want to get into more detail, contact me or your Copley Financial Group, Inc. financial advisor, and we will be more than happy to walk you through what’s going on. Here at Copley Financial Group, Inc. with locations in San Diego, CA. and Uniondale, NY. the team and myself will be with you during this process.
