Market Commentary — March 8, 2021
It was another roller-coaster week on Wall Street, as longer-term interest rates continued to climb. The rise in rates weighed the hardest on growth stocks increasing the discount on their future earnings, while value names managed to post gains.
But are rising rates from low levels really such a terrible thing? Here is a great study shared by my colleague Mike Venuto, suggesting equities are likely to gain when yields are low and rising.
Energy stocks rallied last week as oil prices hit their highest level in over a year thanks to recovering economic activity. On a side note, I actually filled my tank this week.
Fed Chair’s mid-week comments failed to soothe investors’ inflation fears, but the positive jobs report on Friday, with non-farm payrolls rising by 379k, twice the consensus estimates, fueled a market rally heading into the weekend. Nearly all those gains were in hospitality. Stocks on Friday vacillated digesting that news, rising, falling, and then rising sharply again.
In ETF land, energy ETFs, including MLPs, was last week’s best performers. The new VanEck Vectors Social Sentiment BUZZ ETF, backed by celebrity spokesperson Dave Portnoy, took in a whopping $280 million inflows its first week. The fund itself was actually down in performance terms. Interestingly, this concept debuted before in 2016 as the Sprott BUZZ Social Media Insights ETF, only to close in 2019. But thanks to the Reddit-trading revolution, it has been successfully resurrected. In ETFs as in life, timing is everything!
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