Hello and welcome to this week’s Jones Financial Blog! Our goal at Jones & Associates is to help keep you up to date with interesting current economic/market happenings as well as some proprietary portfolio happenings. Knowledge is power and thought we would share some of ours with you. Enjoy!
All data is for the week ended February 5, 2021. Economic/Market happenings:
As both houses of Congress voted for further stimulus, COVID infections declined and vaccination rollouts accelerated, the stock markets were buoyed last week. The S&P 500 rose 4.67%, the Russell 2000 added 7.72% and the NASDAQ advanced 6.04%. Overseas markets also showed gains with the developed markets (MSCI EAFE) up 2.76% and the emerging markets (MSCI EM) rising 4.96%. In the U.S., energy and communications services were the best performing sectors while health care and utilities were the largest laggards. (1)
Interest rates rose and bond values declined last week, with the benchmark 10-year treasury rate advancing 8 basis points to 1.19%. With rates rising to nearly 2% for the 30-year bond, the yield curve has steepened in anticipation of stronger economic growth and higher inflation. (2)
Oil prices ended the week at the highest in over a year, with West Texas crude at $56.85 per barrel for a weekly gain of 8.9%. The prices rose in response to a stronger outlook for economic growth post-pandemic. (3)
Speculative traders using the social media platforms drove silver (SIVR), a Precious Metals holding, to an eight-year high last Monday on suggestions of a short squeeze before the prices settled back to Jan. 29 prices the following day. For the week, SIVR was down 0.3%. (4)
Weekly new claims for unemployment were below expectations and fell to a nine week low of 779,000 in the final week of January, suggesting that hiring is slowly picking up again as a record wave of coronavirus cases recedes. Hardest hit was jobs in bars and restaurants. Layoffs and job losses steadied but remained at still historically elevated levels.5 The unemployment rate for January fell to 6.3% from 6.7% in the prior month but primarily due to lower labor force participation. (6)
The ISM Non-Manufacturing Index rose to 58.7% in January, well ahead of the consensus expectation of 57.0% and one percentage point higher than last month’s read. The January reading is also the highest in nearly two years despite the surge in coronavirus cases, the political tumult, and shutdown measures aimed at curbing the spread of the coronavirus. (7)
Proprietary portfolio happenings:
Company News (6)
Amazon.com Inc. (AMZN), a Core Select and G33 holding, handily beat quarterly revenues and earnings expectations and guidance for the current quarter was significantly ahead of expectations. The company also announced the change in its CEO which was received well by investors. (8) Shares rose 4.6% for the week.
Avery Dennison Corp. (AVY), a G50 holding, reported revenues and earnings that beat expectations and guided both sales and earnings higher, including the benefits of a major restructuring program. Shares rose 14.7% last week. (9)
PayPal Holdings Inc. (PYPL), a Core Select and G33 holding, reported revenues and earnings that beat expectations for this payment technology company. Management will give further guidance for the year at an investor day later this week. Shares rose 15% for the week. (10)
Snap Inc. (SNAP), a G33 holding, reported an acceleration in the growth of daily active users together with higher than expected revenues and earnings. Management guided a further acceleration in revenue growth for the current quarter, raising confidence in new services. Shares rose 20% for the week.11
Did You Know? Candy hearts were originally medical lozenges. In 1847, Boston pharmacist Oliver Chase invented a machine that simplified the lozenge production process into the first candy-making machine. To revolutionize the candy business, Chase shifted his focus to candy production with Necco wafers.
(5) US Department of Labor 2-4-21, (6) Bureau of Labor Statistics 2-5-21, (7) Institute for Supply Management, Services PMI 2-3-21, (8) Amazon.com press release 2-2-21, (9) Avery Dennison press release 2-3-21