Markets struggle after yesterday's rally

Dow dropped 96, decliners over advancers 4-3 & NAZ sank 121.  The MLP index was fractionally lower to the 162s & the REIT index fell 4+ to the 378s.  Junk bond funds hardly budged & Treasuries rose in price.  Oil recovered pennies above 60, after yesterday's selling, & gold inched up 1 to 1724.

AMJ (Alerian MLP index tracking fund)

CL=F Crude Oil 60.63 -0.01 -0.0%

GC=F Gold   1,722.60 -0.40 -0.0%

 

 

Start Using the Leverage of Options and the Power of MarketClub Today!

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

Spending on US construction projects rose 1.7% in Jan as new home building continues to lift the sector.  Last month's increase followed small revised gains in Dec & Nov.  Spending on residential construction rose 2.5% in Jan, with single family home projects up 3%, the Commerce Dept reported.  Despite an economy that's been battered for nearly a year because of the coronavirus pandemic, historically low interest rates & city dwellers seeking more space in the suburbs & beyond has boosted home sales.  Last week, the Commerce Dept reported that sales of new homes jumped 4.3% in Jan & are 19.3% higher than they were last year at this time.  In a separate report, the gov reported that applications for building permits, which typically signal activity ahead, spiked 10.4% in Jan.  Spending on gov projects, which has been constrained by tight state & local budgets in the wake of the pandemic, rose 1.7%.

US spending on construction projects rises 1.7% in January

Kohl's (KSS) reported Q4 earnings & sales that topped estimates, & pointed to stronger growth in 2021.  Facing pressure from activist investors, the company said it will reinstate its div & buy back shares.  With its sales strained by the pandemic, KSS has been working to drive more shoppers online, & add brands that sell home accessories, fitness gear & makeup to lure new customers.  It's also been trying to cut costs & trim inventories, & these efforts have helped improve profits.  “After an extraordinary year managing through the pandemic, we ended the year in a very solid financial position, and we enter 2021 with strong momentum,” CEO Michelle Gass said.  EPS rose to $2.20 from $1.72 a year earlier.  Excluding one-time charges, EPS was $2.22, topping the $1.01 forecast.  Sales fell to $5.88B from $6.54B a year earlier, topping the $5.86B forecast.  Online sales jumped 22% from a year earlier & accounted for 42% of its total sales.  The company expects sales to rise by a mid-teens percentage this year.  Analysts expected sales growth of 17.5% ($17.6B) this year.  It forecast adjusted EPS of $2.45-2.95 for 2021, largely in line with expectations of $2.67.  The stock went up 94¢.
If you would like to learn more about KSS, click on this link:
club.ino.com/trend/analysis/stock/KSSa_aid=CD3289&a_bid=6ae5b6f7

Kohl’s posts better-than-expected holiday-quarter earnings, sales

Dem efforts to push a $1.9-T package thru Congress to offset the coronavirus pandemic's economic impact switch to the Senate this week, as a key deadline looms in the middle of the month.  Fresh off a House vote Sat, where House Speaker Nancy Pelosi lost only 2 of her 221-member caucus, Senate Dems face a similar test of party unity in the evenly divided Senate.  “Last week, the legislation passed in the House of Representatives. This week the Senate will take up the measure,” Senate Majority Leader Chuck Schumer said.  “I expect a hearty debate and some late nights, but the American people sent us here with a job to do — to help the country through this moment of extraordinary challenge, to end through action the greatest health crisis our country has faced in a century,” he added.  Schumer's Rep counterpart, Sen Mitch McConnell, again said the bill was poorly targeted & too generous.  “Whenever their long-time liberal dreams came into conflict with what Americans actually need right now, Democrats decided their ideology should win out,” he said.  Dem leaders are focused on the Mar 14 expiration of several pandemic-related jobless programs as their deadline for final passage of the bill.  That would require Senate passage sometime this week & final House approval next week, a tight but not unrealistic timeline.

$1.9-trillion relief package is now in Senate’s hands as Democrats eye March 14 deadline

Profit taking is the main emotion for stocks today following yesterday's stellar run.  Additionally, the fate of the extremely bloated stimulus bill is weighing on the minds of investors. 

Dow Jones Industrials

 

Markets rebound on vaccine optimism and economic recovery

Dow jumped 603, advancers over decliners better than 4-1 & NAZ soared 396.   The MLP index shot up 8+ to the 162s & the REIT index rose 2+ to the 384s.  Junk bond funds remained strong & Treasuries were purchased as stocks rallied.  Oil slid back almost 1 to under 61 & gold fell 6 to 1791 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Free Apple Analysis!

Bring Your Portfolio Into The 21st Century

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

Dr Scott Gottlieb said that he sees promising signs that suggest Covid vaccines are effective in reducing person-to-person spread of the virus in addition to their well-documented ability to protect against severe disease.  He cautioned that while the early data appears positive, some uncertainty remains.  “I think there’s a reduction in transmission. The question is: What’s the magnitude of that?” said Gottlieb.  The FDA issued emergency use authorization for the trio of vaccines after individually determining they were safe and effective at preventing recipients from developing symptomatic Covid disease, particularly severe cases and deaths.  What’s been less clear since the US began administering shots of vaccines in Dec is specific data around limiting virus spread; one reason doctors have been urging even those who have been vaccinated to continue taking precautions.  For example, since announcing Johnson & Johnson's (JNJ), a Dow stock & Dividend Aristocrat, vaccine was given emergency use authorization, the FDA said there was not “evidence that the vaccine presents transmission of SARS-CoV-2 from person-to-person.”  However, Gottlieb said there's reason to be optimistic that the vaccines do just that, even if “the definitive study” proving it has yet to emerge.  “The accumulating evidence is very convincing that there’s a reduction in transmission,” added Gottlieb.  He pointed to 2 studies conducted in Israel, one of the world’s leading countries in vaccinating its population, that suggest the Pfizer (PFE)-BioNTech (BNTX) vaccine cut down on virus transmission.  Gottlieb also said JNJ found in its trial a 74% reduction in participants developing asymptomatic infection.  That finding from JNJ, Gottlieb said, “is a pretty good indication that there’s a reduction in transmission.”  “I think most people agree ... people who are vaccinated are less likely to transmit the infection if they do become infected themselves,” Gottlieb said, while adding he expects a more definitive answer “within the next month or two.”

Dr. Scott Gottlieb sees promising signs that Covid vaccines reduce transmission

Gold futures gave up early gains today to stretch losses into a 5th straight session despite a pause in the run up for Treasury yields.  Gold for Apr lost $5 to settle at $1723 an ounce after trading as high as $1757.  Prices based on the most-active contract registered another finish at the lowest since Jun 2020.  Today's move comes after gold saw a weekly decline of about 2.7% & a loss of 6.6% for the month, which was its largest monthly fall since 2016.  The Federal Reserve has suggested the climb in yields reflects upbeat expectations for an economic recovery fueled by the vaccine program & the likelihood of additional fiscal stimulus.  Meanwhile, the $ was up 0.2%.  A firmer $, which most commodities are priced in, & rising yields can make gold less appealing to buyers comparing the haven asset against yield-bearing investments that are perceived as safe.  Gold doesn't offer a coupon.

Gold prices stretch losing streak to 5 sessions

The head of the Centers for Disease Control  & Prevention said  that she is “really worried” about some states rolling back public health measures intended to contain the coronavirus pandemic as US cases appear to be leveling off at a “very high number.”  The declines in Covid-19 cases seen since early Jan now appear to be stalling at around 70K new cases per day, CDC Director Dr Rochelle Walensky said.  “With these statistics, I am really worried about more states rolling back the exact public health measures we have recommended to protect people from Covid-19.”  “Seventy thousand cases a day seems good compared to where we were just a few months ago,” she added.  “Please hear me clearly: At this level of cases with variants spreading, we stand to completely lose the hard-earned ground we have gained.”  The US is recording at least 67K new Covid-19 cases each day, based on a 7-day average.  The US peaked at close to 250K cases per day in early Jan following the winter holidays.  Top US health officials, including Walensky & White House Chief Medical Advisory Dr Anthony Fauci, have warned in recent weeks that the rise of more contagious variants could reverse the current downward trajectory in infections in the US & delay the nation's recovery from the pandemic.

CDC director worried about states rolling back Covid measures as cases plateau

Oil futures ended lower, as traders eyed tensions between the US & Saudi Arabia, ahead of a decision this week by OPEC & its allies that’s expected to see a loosening of production curbs.  West Texas Intermediate crude for Apr fell 86¢ (1.4%) to settle at $60.64 a barrel.  May Brent crude, the global benchmark, shed 73¢ (1.1%) to $63.69 a barrel.  Prices had found support in earlier dealings amid prospects for the passage of a US stimulus bill, which is expected to provide a boost to energy demand.  The House on Sat passed the Biden administration’s $1.9T package of COVID-19 relief spending.  It now moves to the Senate, where it may be pared as Dems work to push it thru a chamber that's divided 50-50, with VP Kamala Harris serving as the tiebreaking vote.  Oil has rallied so far this year, boosted by expectations for the rollout of COVID-19 vaccines & fiscal stimulus to lead to a strong pickup in demand, while efforts by OPEC+ to keep a lid on production have helped keep the market in balance, a move enhanced by Saudi Arabia's decision to cut an additional 1M barrels a day in Feb & Mar.

Oil ends lower as traders eye Saudi Arabia ahead of this week’s OPEC+ output decision

Investors bid stocks higher aggressively after a dreary time last week.  Optimism about more vaccines to fight the virus & positive economic data was very encouraging.  Meanwhile the stimulus bill is going to the Senate where it faces an uncertain future.

Dow Jones Industrials

Markets rally as J&J vaccine is approved

Dow vaulted 686, advancers over decliners 6-1 & NAZ jumped 320.  The MLP index soared 7+ to the 161s & the REIT index advanced 5 to 387.  Junk bond funds rose along with stocks & Treasuries continued in strong demand, bringing lower yields.  Oil  climbed in the 61s & gold gained 12 to 1740.

AMJ (Alerian MLP index tracking fund)

CL=F Crude Oil 61.92   +0.42 +0.7%

GC=F Gold    1,739.30 +10.50 +0.6%

 

Start Using the Leverage of Options and the Power of MarketClub Today!

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

The Food & Drug Administration (FDA) announced that it had issued an emergency use authorization for the Johnson & Johnson Covid-19 vaccine, the 3rd overall.  “The authorization of this vaccine expands the availability of vaccines, the best medical prevention method for COVID-19, to help us in the fight against this pandemic, which has claimed over half a million lives in the United States,” said Acting FDA Commissioner Dr Janet Woodcock   “The FDA, through our open and transparent scientific review process, has now authorized three COVID-19 vaccines with the urgency called for during this pandemic, using the agency’s rigorous standards for safety, effectiveness and manufacturing quality needed to support emergency use authorization.”  The FDA said tests on the Janssen Biotech vaccine was about 67% effective in preventing moderate to severe cases within 14 days after dosing & 66% effective against severe to critical cases after 28 days.  Unlike the previous vaccines, which are more effective, it takes just one shot.  The stock rose 1.69.
If you would like to learn more about JNJ, click on this link:
club.ino.com/trend/analysis/stock/JNJa_aid=CD3289&a_bid=6ae5b6f7

Johnson & Johnson COVID-19 vaccine 3rd to receive emergency use authorization

More than one M Americans were lifted out of poverty in Jan as a result of federal stimulus checks & additional unemployment benefits, according to economists at the University of Chicago & University of Notre Dame.  It's the first drop in poverty since the summer, they said, though they cautioned the gains may quickly erode absent of more relief.  Federal lawmakers in Dec passed a $900B Covid-19 relief measure that offered $600 stimulus checks & a $300 weekly boost in jobless benefits.  It also extended unemployment benefits to those who don't typically qualify, like self-employed & gig workers.  That cash infusion led the US poverty rate to fall to 11.3% in Jan, from 11.8% in Dec.  That means about 1.6M people fell from the ranks of the poor as the gov began distributing payments.  The reduction marks a turnaround from the growing hardship that emerged after CARES Act pandemic relief began to dry up last year.  More than 8M people fell into povertybetween Jun-Dec.

Stimulus checks, unemployment benefits lift 1.6 million Americans out of poverty

American manufacturers grew in Feb at the fastest pace since the onset of the pandemic & business leaders are increasingly optimistic about the economy, a new survey showed.  The Institute for Supply Management (ISM) said its manufacturing index rose to 60.8% last month from 58.7% in Jan & matched a 2-year high.  Readings over 50% indicate growth & anything over 55% is considered exceptional.  The increase surpassed expectations which expected the the ISM index to total 58.9%.  The biggest worry?  A shortage of certain key materials such as semiconductors are pushing prices higher & in some cases constraining production.  That could lead to an increase in inflation & even hinder the recovery.  New orders, production & employment all improved last month.  The index for new orders advanced 3.7 points to 64.8% while the production gauge increased 2.5 points to 63.2%  The employment barometer also climbed for the 3rd month in a row — to 54.4% from 52.6% — despite higher absenteeism & a dearth of skilled labor.  The increase in employment bodes well for the US jobs report for Feb.  The current prediction is for the number of new jobs created to rise to 240K from a meager 49K in Jan.  16 of the 18 industries tracked by ISM expanded in Feb.  The ISM index is compiled from a poll of senior execs who are asked whether business is getting better or worse.  The gauge tends to rise or fall in tandem with the health of the economy.   Manufacturers have led the economic recovery & production has returned close to normal.  Businesses are even more optimistic about the next year.  Orders are increasing in anticipation of strong sales as the vaccines do their work & more gov stimulus is pumped into the economy.  The Biden administration is on the verge of passing another federal aid package that could total close to $2T.

U.S. manufacturers growing at fastest pace since start of pandemic, ISM finds

Excitement over the new vaccine brought out buyers in droves.  The news on the economy didn't hurt.  For the time being inflation fears, which brought on selling last week, has receded.  But those fears have not gone away.  Negative thinking investors are buying safe haven gold & Treasuries.

Dow Jones Industrials