Potential Reacceleration | Daily Market Update

Wednesday, February 24, 2021

Top Story

LEI Signals Potential Reacceleration. The Conference Board released its Leading Economic Index (LEI) report for January on Monday, showing the series rose 0.5% month over month. We believe the report could represent an early sign that we are beginning to exit a patch of economic weakness and are set for a reacceleration. We examine the data release, as well as its implications for future economic growth, in greater detail on today’s LPL Research blog.

Daily Insights

US stocks open higher after Tuesday’s intraday rally

  • The Nasdaq 100 is underperforming this morning, continuing the trend over the past week.
  • European stocks are higher in midday trading, with Germany outperforming.
  • Asian stocks were under pressure overnight with Hong Kong lagging on the news of increased transaction costs for stock exchanges.

Big reversal

  • Stocks staged a huge reversal yesterday after Federal Reserve (Fed) Chair Jerome Powell’s dovish comments calmed earlier fears.
  • The Nasdaq was down close to 4% and finished down only half a percent.
  • The S&P 500 Index was down 1.8% and finished slightly in the green. This was the first time the S&P 500 had been down that much and closed green since June 2020.
  • The S&P 500 closed 2% off the lows, the most since any day since September 2020.

Fed Chair Jerome Powell downplays inflation threat in Congressional testimony

  • Powell also downplayed concerns that another large fiscal package would increase inflationary pressure.
  • Despite rising concerns that inflation is heating up, the Fed views any inflationary pressures as transitory.
  • The Fed views economic conditions as a long way from being ready to be free from monetary policy support.

Consumer confidence on the upswing

  • The Conference Board’s Consumer Confidence Index rose to 91.3 from 88.9.
  • Present Situation Index jumped 6.5 points as lower COVID-19 cases and fiscal stimulus boosted consumer conditions.
  • Increase in consumer confidence coincided with January’s massive retail sales growth.

Technical update

  • Markets are continuing momentum from late yesterday, as the Nasdaq and Russell 2000 lead major benchmarks higher in early trading.
  • Tuesday, the Nasdaq closed more than 3.5% off its intraday lows, reversing off support at the 13,000 level. That level continues to mark short-term support, while recent highs above 14,100 may act as resistance.

COVID-19 news

The United States reported 70,000 new COVID-19 cases on Tuesday, the worst week to week performance since January 11 as prior week’s data were depressed by the winter storm (source: Johns Hopkins).

  • Nationally, the number of people currently hospitalized and the number of fatalities per day continue to trend down.
  • Data from Florida may be suggesting that rising cases of the United Kingdom virus variant may be starting to outweigh the original variant.

Why Sustainable Investing is Sustainable

Chief Strategist Ryan Detrick, Equity Strategist Jeffrey Buchbinder, and guest speaker Jason Hoody, Head of Investment Manager Research discuss why sustainable investing is a major trend that isn’t going away & the potential positive impact of environmental, social, and governance factors on returns. We also explore the strong earnings season and recent retail sales during this week’s Market Signals.



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