February 22 through February 26, 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. M8
Winners & Losers P. M9
Research Reports P. M10
Market View P. M11
Statistics P. M12
30,932.37
52-wk:+21.74%YTD:+1.06%Wkly:-1.78%
Dow Jones Industrials
3811.15
S&P 500
52-wk:+29.01%YTD:+1.47%Wkly:-2.45%
13,192.34
Nasdaq Composite
52-wk:+53.98%YTD:+2.36%Wkly:-4.92%
$143.12
iShares 20+ Year Treasury Bond ETF
52-wk:-7.85%YTD:-9.26%Wkly:-0.10%
2%
-6
-8
-4
-2
0
Monday Tuesday Wednesday Thursday Close
Source: Barron’s StatisticsFriday
MARKET PERFORMANCE DASHBOARD
Pullback
TheS&P500began
theweekwithitsfifth-
straight loss. The Nasdaq
Composite fell 2.5%
as rising bond yields
pressured lofty tech
valuations.
SignsofLife
Growth shares led the market lower
Tuesday before an afternoon rebound
stemmed the bleeding. The Nasdaq bounced
back from a 3.9% loss to slip just 0.5%.
Vaccine Progress
The FDA released a positive
analysis of Johnson & Johnson’s
Covid-19 vaccine Wednesday,
suggesting emergency authorization
could follow. The Dow Jones Industrial
Averagehitarecordhigh.
Bond-Market Rout
The yield on the 10-year U.S. Treasury note
briefly touched 1.6% Thursday. That compares
withayieldbelow1%atthestartof2021.
THE TRADER
Rising
Treasury
Yields Cast
APallonthe
Stock Rally
I
t turns outthat rising rates
really do matter—and inves-
tors ignore them at their peril.
The Dow Jones Industrial
Average fell 561.95 points, or
1.8%, to 30,932.37 this past
week, while the S&P 500 in-
dex dropped 2.4% to 3811.15, and the
Nasdaq Composite slumped 4.9% to
13,192.35.
Usually, we can point to a big event
or a piece of economic data that shook
up the market, but that wasn’t the case
this time. The data were solid, with
weekly jobless claims dropping more
than expected, durable-goods orders
rising more than forecast, and personal
income getting a big boost from stimu-
lus checks sent out in January.
A big stimulus bill, one that would
send out even more money to Ameri-
cans, seems all but assured, even as a
$15 minimum wage remains a sticking
point. And there was nothing negative
on the Covid-19 front to shake investor
confidence in a reopening as winter
turns to spring and spring to summer.
But there was the 10-year Treasury
yield. After ending the previous week
at 1.344%, it surged as high as 1.61%,
according toTradeweb, before ending
the week at 1.46%. It wasn’t the first
surge in yields in recent months, but
this time it was led by a change in real
yields—which turned less negative—
rather than a shift in inflation expecta-
tions. It also meant that investors hold-
ing theiShares 20+ Year Treasury
Bondexchange-traded fund (ticker:
TLT), which dropped 5.8% in Febru-
ary, took a bath, which isn’t supposed
to happen to supposedly safe assets.
Still, the jump in yields wasn’t a
negative for the entire market, at least
not at first. The Dow gained 1.3% on
Wednesday, when Federal Reserve
Chairman Jerome Powell spoke to a
congressional committee and said that
rising yields wouldn’t change the Fed’s
stance on monetary policy. Instead, it
would remain focused on a full recov-
ery in the job market before acting to
slow the economy.
Yet the Nasdaq remained on the
defensive, as higher yields—and faster
growth—make expensive growth
stocks look less attractive. By the end
of the week, the rest of the market was
casting a skeptical eye on Powell’s
stance. And for good reason. As re-
By Ben Levisohn
MARKET WEEK