Barron's - USA (2021-02-08)

February 1 through February 5, 2021

Euro Trader P. M4

Emerging Markets P. M4

Striking Price P. M5

Commodities P. M6

Inside Scoop P. M7

13D Filings P. M7

Power Play P. M7

Charting the Market P. M9

Winners & Losers P. M10

Research Reports P. M11

Market View P. M12

Statistics P. M13

31,148.24

52-wk:+7.03%YTD:+1.77%Wkly:+3.89%

Dow Jones Industrials

3886.83

S&P 500

52-wk:+16.80%YTD:+3.48%Wkly:+4.65%

13,856.30

Nasdaq Composite

52-wk:+45.54%YTD:+7.51%Wkly:+6.01%

2233.33

Russell 2000

52-wk:+34.80%YTD:+13.09%Wkly:+7.70%

8%

0

2

4

6

Monday Tuesday Wednesday Thursday Close

Source: Barron’s Statistics

Friday

MARKET PERFORMANCE DASHBOARD

Keep Calm

TheS&P500,DowJonesIndustrial

Average, and Nasdaq moved less than

0.15% on Wednesday. Even GameStop

stock hardly budged.

Rebounding

Stocks opened the week with a broad rally,

comingoffofthepriorweek’sslump.

The Nasdaq Composite jumped 2.5%.

In Lockstep

All11S&P500sectorsgained—moving

inthesamedirectionforthefifth-straight

session Tuesday. Thank vaccine and

stimulus optimism.

Cowabunga!

TheS&P500,Nasdaq,andRussell2000

stretchedtheirwinningstreakstoafifthday

onFriday.Allthreeclosedatrecordhighs.

THE TRADER

The Market

Strikes Back.

But Keep

Your Eye on

Fe d Va d e r.

Y

a gotta believe, reliever

Tug McGraw said of

his 1973 New York

Mets before they went

on to win an unlikely

National League pen-

nant. Investors

seemed to have embraced the same

sentiment for this stock market, which

continues to put every setback behind

it as it marches to record highs.

The Dow Jones Industrial Average

advanced 1,165.62 points, or 3.89%, to

31,148.24 this past week, while the S&P

500 rose 4.6%, to 3886.83, and the

Nasdaq Composite gained 6%, to

13,856.30. The Russell 2000 left them

all behind with a 7.7% jump to 2233.33.

It was a striking turnaround fol-

lowing the previous week’s 3%-plus

declines—and a fast one. At the end of

Friday a week ago, we were concerned

that the derisking—market jargon for

selling—that hedge funds had to do

following theGameStop(ticker:

GME) short squeeze would last

awhile. Instead, it appears that the

pros had derisked so much during the

last week of January—Fundstrat’s

Tom Lee called it the “largest [hedge-

fund] degrossing in a decade, second

only to March 2020”—that they had to

reload this past week.

They certainly had reason to. Let’s

start with the economic data. While

January’s payroll report was a disap-

pointment—the U.S. added just 49,000

jobs, and December’s losses were re-

vised even lower—everything else

came up roses. The Institute for Supply

Management’s services survey not only

topped expectations, but the new-order

and hiring components pointed to fur-

ther growth ahead, and durable-goods

orders topped expectations as well. The

economy should also get a lift from

more stimulus payments, whether

through a bipartisan agreement or the

Democrats passing a $1.9 trillion relief

package on their own.

But the real driving force has been

improving Covid-19 news. The weekly

number of new cases has dropped 30%

from two weeks ago. New vaccines will

be on the scene soon, withJohnson &

Johnson(JNJ) filing for emergency-use

authorization andNovavax(NVAX)

heading in that direction. At this pace,

reopening should happen on schedule,

letting people who work at restaurants,

By Ben Levisohn

MARKET WEEK

“It took me two weeks to get to

the top of Kilimanjaro and I did

it in my basement.”

• Scott Watterson, CEO of ICON Health and Fitness