The Day After | Daily Market Update

Friday, March 19, 2021

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The day after

Yields soared, with the 10-year yield closing at 1.72%, its highest level in 14 months, with the 10-year on pace to be up eight consecutive weeks. Worries that the Federal Reserve (Fed) was too dovish on Wednesday and is now firmly behind the eight ball and will be forced to increase rates well before 2024 drove the move higher. As a result, the S&P 500 Index fell 1.5% the day after making a new high, the second worst day after a new high in 20 years.

Daily Insights

U.S. stocks open little changed to conclude a challenging week for technology and small cap stocks.

  • U.S. Treasury yields closed at 1.72, the highest level in 14 months.
  • European stocks are trading lower at midday as sovereign yields pull back.
  • Asian markets were mostly lower overnight after continuing the weakness in U.S. technology stocks.

LEI Growth Remains Tepid

  • The Conference Board released its Leading Economic Index (LEI) report for February on Thursday, showing the series rose 0.2% month over month.
  • Since its initial bounce off of the early 2020 lows, the index has grown at a decelerating rate as we wait for improving vaccination trends to make their way into the data in a meaningful way.
  • We examine the data release, as well as its implications for future economic growth, in further detail on the LPL Research blog, available at 12pm ET.

Crude craters

West Texas Intermediate crude oil (WTI) lost 7.2%, for its fifth consecutive down day.

  • Thursday’s sudden drop was attributed to a market that got ahead of itself and was vulnerable to a reversal (Bloomberg). Other factors for the drop include slowing improvement with COVID-19 in Europe as well as weakening demand in Asia.
  • LPL Research continues to expect strong overall global demand to support higher oil prices at current levels.

Technical update

The S&P 500 closed at session lows on Thursday, dragged lower by large growth stocks as well as a 4.7% loss for the energy sector. Oil fell more than 7% yesterday, but has support near $59/bbl. and is bouncing early today. On the Nasdaq Composite, resistance is marked by 13,607 while support can be found at the March 5 intraday low of 12,397.

March Madness: Stock Market Edition

LPL Research share their “Final Four Factors” for the stock market in 2021. Learn more in this week’s Weekly Market Commentary available on the Resource Center, Marketing on Demand, and Broadridge.

4 Things That Really Matter For Stocks in 2021

This week on the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discuss four things that matter the most for stocks in 2021.



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