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1.

Roblox goes public, inflation data: What to know in the week ahead

2021-03-07 13:55:54 by Emily McCormick from Yahoo Finance

This week, investors will be eyeing new inflation data, which will offer a look at whether prices have already begun to creep up as some have feared ahead of a major economic reopening. A highly anticipated direct listing for the video game company Roblox is also on deck.

On Wednesday, the Labor Department will release its monthly Consumer Price Index (CPI), which tracks changes in prices for consumers across a broad basket of goods and services. Consensus economists anticipate that the CPI accelerated to see a 0.4% month-over-month increase in February, up from the 0.3% monthly rise in January, according to Bloomberg-compiled data.

Over last year, the CPI likely rose by 1.7%, picking up from the 1.4% rise in January. But excluding more volatile food and energy prices, the CPI is expected to have risen 1.4% year-over-year to match its January increase, since a jump in energy prices during the harsh winter weather last month likely contributed much of the gain.

Still, the possibility of an upside surprise in consumer prices gains has left investors jittery, with many market participants bracing for inflationary pressures to pick up rapidly later this year as more businesses reopen and many consumers start to release their pent-up savings during the pandemic.

"If our forecast is correct, February would mark the beginning of a reversal of COVID-induced relative price changes. That would imply goods prices might decline but service prices might increase in coming months, as consumer demand shifts back to services requiring personal contact," Nomura chief economist Lewis Alexander wrote in a note Friday.

"We expect relative price changes between goods and services to exert modest inflationary pressure going forward," he added. "However, the persistent softness of rent inflation should limit the degree of acceleration in core inflation for some time, with the exception of an expected jump in year-on-year changes due to base effects."

Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, U.S., January 30, 2019. REUTERS/Leah Millis     TPX IMAGES OF THE DAY
Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, U.S., January 30, 2019. REUTERS/Leah Millis TPX IMAGES OF THE DAY
Leah Millis / Reuters

Federal Reserve Chair Jerome Powell has reiterated repeatedly that he believes any impending rise in inflation this year will be "transitory," resulting as the year-over-year data laps 2020's highly depressed inflationary prints. For years preceding the pandemic, inflation had held well below the Fed's 2% target, as measured by core personal consumption expenditures (PCE). The Fed has signaled the economy remains "well below" its targets, suggesting it would not change its policy stance or work to stave off the first signs of rising inflation.

But investors' fears that the Fed may be under appreciating a possible surge in inflation has begun to mount in recent weeks. Those concerns have only grown in amplitude as Congress passes additional stimulus to consumers, and as the Federal Reserve keeps its foot on the gas pedal with ultra-accommodative monetary policy comprising near-zero interest rates and a massive asset purchase program. The benchmark 10-year Treasury yield surged to a one-year high of about 1.6%, jumping by more than 50 basis points from levels a month earlier, as investors priced in the possibility that the Fed may need to tighten policy sooner than it has telegraphed as of late.

"It is the inflation profile once reopening begins in earnest that should be of most interest," RBC Capital Markets economists wrote in a note Friday. "The reality is that we are likely still a few months away from a significant supply/demand imbalance that is likely to take prices much higher."

"Our baseline is for inflation to easily print with a 3-handle in 2Q and for the balance of 2021 thereafter," he added.

Roblox hits the public markets

Meanwhile, the video game company Roblox is set to make its public debut this week, in one of the latest high-profile, public facing companies to hit the public markets.

Roblox's direct listing is set to take place on the New York Stock Exchange on Wednesday under the ticker symbol "RBLX." The move comes after the company delayed its public offering late last year amid a wave of exuberance in markets following Airbnb's (ABNB) and DoorDash's (DASH) IPOs.

By going public via a direct listing, Roblox will have existing stakeholders sell shares directly to public investors, rather than issuing new shares and conducting a fresh capital raise in the process as is the case in a traditional initial public offering. Companies including Spotify (SPOT) and Slack (WORK) also went public in recent years via direct listings, eschewing the typical IPO.

Roblox was last valued in the private market at $4 billion, following a $150 million funding round led by the venture capital firm Andreessen Horowitz in February last year.

Roblox daily active users have accelerated over the past couple years, and especially so during the pandemic with so many people stuck indoors and seeking out entertainment. Daily active users on Roblox grew by 85% to 32.6 million in 2020, accelerating from a 47% growth rate in 2019. Users' hours engaged also more than doubled to 30.6 billion last year.

That user growth has translated to major revenue growth for the 17-year-old company, which increased by 82% to about $924 million last year. Net losses have also widened, however, increasing from $71 million to about $253.3 million from 2019 to 2020.

 Alice Wilkinson (7) adds a face mask to her character on the game 'Roblox' at her home in Manchester, as the spread of the coronavirus disease (COVID-19) continues, Manchester, Britain, April 5, 2020. REUTERS/Phil Noble
Alice Wilkinson (7) adds a face mask to her character on the game 'Roblox' at her home in Manchester, as the spread of the coronavirus disease (COVID-19) continues, Manchester, Britain, April 5, 2020. REUTERS/Phil Noble
Phil Noble / reuters

As a beneficiary of 2020's stay-in-place orders, Roblox has already acknowledged that it's meteoric growth rates will likely not be sustained going forward.

"We have experienced rapid growth in the three months ended June 30, 2020, September 30, 2020, December 31, 2020, and for a portion of the three months ended March 31, 2020, due in part to the COVID-19 pandemic given our users have been online more as a result of global COVID-19 shelter-in-place policies," the company said in a February 22 filing. "For example, our bookings increased 171% from the year ended December 31, 2019 to the year ended December 31, 2020. We do not expect these activity levels to be sustained, and in future periods we expect growth rates for our revenue to decline, and we may not experience any growth in bookings or our user base during periods where we are comparing against COVID-19 impacted periods."

Roblox also recently issued guidance for the first and second quarters of this year, or for the three months ending in March and June, respectively. For the first quarter, daily active users may grow as much as 68% to 39.6 million, and revenue could grow as much as 85% to $335 million. For the second quarter, however, daily active user growth will likely grow as much as only 9% over last year, though revenue could still likely rise by as much as 86%, Roblox said.

Economic Calendar

  • Monday: Wholesale inventories, month-over-month, January final (1.3% expected, 1.3% in December)

  • Tuesday: NFIB Small Business Optimism, February (96.3 expected, 95.0 in January)

  • Wednesday: MBA Mortgage Applications, week ended March 5 (0.5% during prior week); Consumer Price Index, month-over-month, February (0.4% expected, 0.3% in January); Consumer Price Index excluding food and energy, month-over-month, February (0.2% expected, 0.0% in January); Consumer Price Index year-over-year, February (1.7% expected, 1.4% in January); Consumer Price Index excluding food and energy, year-over-year (1.4% expected, 1.4% in January); Monthly Budget Statement, February (-$162.8 billion in January)

  • Thursday: Initial jobless claims, week ended March 6 (725,000 expected, 745,000 during prior week); Continuing claims, week ended February 27 (4.180 million expected, 4.295 million during prior week); JOLTS job openings, January (6.600 million expected, 6.646 million in December); Household change in net worth, 4Q ($3.817 trillion in 3Q)

  • Friday: Producer price index, month-over-month, February (0.4% expected, 1.3% in January); Producer price index excluding food and energy, month-over-month, February (0.2% expected, 1.2% in January); Producer price index year-over-year, February (2.7% expected, 1.7% in January); Producer price index excluding food and energy, year-over-year (2.6% expected, 2.0% in January); University of Michigan Consumer Sentiment, March preliminary (78.0 expected, 76.8 in February)

Earnings Calendar

  • Monday: StitchFix (SFIX), ContextLogic (WISH) after market close

  • Tuesday: MongoDB (MDB) after market close

  • Wednesday: Bumble (BMBL), Oracle (ORCL), AMC Entertainment (AMC) after market close

  • Thursday: DocuSign (DOCU), Ulta (ULTA), Poshmark (POSH) after market close

  • Friday: N/A

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

Read more from Emily:


2.

$1.6 Trillion Gone: Nasdaq Stock Implosion Gets Ugly

2021-03-05 18:08:51 by MATT KRANTZ from Investor's Business Daily

Investors reaped enormous wealth riding S&P 500 and Nasdaq stocks' breathless run higher. But that's making some giant-sized losses on the way down.


3.

Here's why tech is getting whacked while Buffett's Berkshire Hathaway and Chevron are surging: Trader

2021-03-05 17:40:02 by Yahoo Finance Video

Yahoo Finance's Jared Blikre is joined by JC Parets, All Star Charts Founder & Chief Strategist to discuss why tech is getting whacked while Buffett's Berkshire Hathaway and Chevron are surging.


4.

QQQ Option Trade Idea When Volatility Is High

2021-03-05 15:29:38 by GAVIN McMASTER from Investor's Business Daily

Iron condors are neutral trades that are best used when volatility is high. We certainly have high volatility currently, so let's look at an example using the Nasdaq QQQ Trust ETF (QQQ). As a reminder, an iron condor is a combination of a bull put spread and a bear call spread. The idea with the trade is to profit from...


5.

If you're getting a tax refund, something is radically wrong: Suze Orman

2021-03-05 14:00:00 by Yahoo Finance Video

Personal finance expert, Suze Orman joins 'Influencers with Andy Serwer' to share her tips for tax season.


6.

February jobs report: Economy adds 379,000 payrolls, unemployment rate falls to 6.2%

2021-03-05 13:30:47 by Emily McCormick from Yahoo Finance

The U.S. economy added back the most jobs in four months in February, as easing COVID-19 case counts and a ramping vaccine rollout allowed distancing restrictions to begin to moderate. The unemployment rate also unexpectedly improved during the month.

The U.S. Labor Department released its February jobs report Friday morning at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus estimates compiled by Bloomberg:

  • Non-farm payrolls: +379,000 vs. +200,000 expected and a revised +166,000 in January

  • Unemployment rate: 6.2% vs. 6.3% expected and 6.3% in January

  • Average hourly earnings, month-over-month: 0.2% vs. 0.2% expected and a revised 0.1% in January

  • Average hourly earnings, year-over-year: 5.3% vs. 5.3% expected and a revised 5.3% in January

The February jobs report also included a notable upward revision to payrolls gains in January, but a downward revision to losses in December. January's payroll gain was revised to 166,000, up from the tepid rise of 49,000 previously reported. However, December's payroll losses – the first since April — were revised to 306,000, from the drop of 227,000 reported earlier. Altogether, the U.S. economy remains about 9.5 million payrolls short of its pre-pandemic levels.

But last month, job growth accelerated as declining new COVID-19 cases and broadening vaccine-conferred immunity helped more businesses reopen with greater capacity. The unemployment rate unexpectedly improved to 6.2%, improving significantly from the pandemic-era high of 14.8%, but holding still well above the 50-year-low of 3.5% from February 2020. And the tick lower in the unemployment rate came even as the labor force participation rate held steady at 61.4%.

"Today’s employment report smashed expectations as 379K jobs returned to the economy during the month of February. This was a welcomed change of events for a suppressed labor market as we begin to turn the helm on a restrained economy and open back up," Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email Friday morning. "Looking ahead, it appears the ship is pointed in the right direction and the additional stimulus coming from Congress should be the wind in the sails to get the economy back on track."

Still, however, some economists warned against getting too excited about the recovery too quickly, given the ground the economy still needs to recuperate to return to pre-pandemic levels.

"Now in the second year of the pandemic, the labor market has 9.5 million fewer jobs than it did before the coronavirus arrived in the U.S. That gap rises to 11.5 million once you consider the jobs gains we would have seen absent the crisis," Nick Bunker, Indeed economic research director, wrote in an email. "At this pace, it will take about four and a half years to get back to where the labor market would have been without the pandemic. Millions of Americans out of work do not have that time."

The vast majority of industries registered net payroll gains in February, including some of the most badly beaten-down pockets of the service economy. Leisure and hospitality payrolls rose by 355,000 in February after declining by more than half a million between December and January, as a resurgence in new COVID-19 cases around the holidays led to renewed social distancing restrictions. Gains in this industry were followed by a wide margin by a rise in temporary help services positions, which rose by nearly 53,000 in February for a third straight monthly gain. Retail trade and education and health services payrolls also each rose by more than 40,000, respectively.

"The core story here is that the re-opening of services will be the dominant factor in the payroll numbers over the next few months," Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in an email Friday morning. "The monthly gains are likely to rise sharply unless a renewed surge in COVID cases, due to the B117 variant, forces states to delay their re-openings until vaccination finally squashes it."

The goods-producing sector, however, posted a back-to-back month of net payroll declines in February, with harsh winter weather weighing on many of these industries. Construction payrolls fell by 61,000 during the month, though manufacturing payrolls rose by 21,000 to more than reverse a drop in January. Consensus economists had been looking for manufacturing payrolls to rise by 15,000.

Other reports on the U.S. labor market have come in mixed recently. ADP reported Wednesday that private payrolls increased by just 117,000 in February, sharply missing estimates for a rise of 205,000 payrolls. But elsewhere, weekly jobless claims trended lower in February versus January, suggesting a moderation in the number of newly unemployed. Plus, the Conference Board's labor differential — measuring the percentage of those saying jobs are "plentiful" subtracted by those claiming jobs are "hard to get" — turned positive for the first time since November in February.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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7.

Seniors are rushing to get back on planes

2021-03-05 11:01:50 by Myles Udland from Yahoo Finance

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Friday, March 5, 2021

Vaccinations are having the biggest impact on airlines.

As we noted on Thursday, investors are fully onboard the re-opening train.

But these trades aren't only anticipating what might happen when the masses are vaccinated and the economy is fully re-opened — they are also responding to real-time changes in data.

In a note to clients published Thursday, economists at Bank of America Global Research led by Michelle Meyer flagged the massive surge in spending on airlines the firm is seeing from its Bank of America cardholders who are most likely to be vaccinated.

And this chart makes clear that it seems there is one thing people are most inclined to do once they get the vaccine: fly.

Consumers between ages 72-92 have dramatically ramped up their airline spending after COVID vaccines became available, a sign of how quickly consumer habits are liable to change once people feel safe to resume a wide range of activities. (Source: Bank of America Global Research)
Consumers between ages 73-92 have dramatically ramped up their airline spending after COVID vaccines became available, a sign of how quickly consumer habits are liable to change once people feel safe to resume a wide range of activities. (Source: Bank of America Global Research)

"We focus on spending trends amongst traditionalists which are aged 73-92 and are therefore most likely to have received the COVID vaccine," Bank of America writes. "In particular, spending on airfare surged for traditionalists as compared to other generations — [the chart above] shows the indexed level of average spending by cohort to June 2020; traditionalists spending is now 4X the level in June."

The firm adds: "We do not see the same [spending] pattern for lodging which may suggest that traditionalists are traveling to see family rather than take vacations. Spending at restaurants and bars increased modestly for this cohort recently relative to other age cohorts but there was little difference in brick & mortar retail spend."

All of which sounds like great news for airlines. The market, of course, has anticipated some of the specific trends that will play out as the economy re-opens with air travel being one of them. And while airline stocks were caught up in Thursday's sell-off, shares of major U.S. airlines like United (UAL), American (AAL), and Delta (DAL) are just a few percentage points off their 52-week highs.

Bank of America's report, then, serves as confirmation of what investors have expected from consumer behavior as the economy re-opens. And whether Millennials start hopping on planes with the enthusiasm of their grandparents once their turn to get a vaccine is up remains to be seen.

One imagines that this cohort might change its behavior to a slightly more muted degree given the elevated risk COVID infections pose to the elderly. Then again, if there is a place consumers tend to draw the line on which risks they are willing to take during the pandemic, air travel is a popular one.

The big takeaway from this data, however, is that as we move into the second quarter things will move quickly. The rapid ramp in airline spending BofA sees in its data won't be the only economic activity chart that soars up and to the right. And this chart may serve as a harbinger of how fast behaviors change once people are vaccinated and give themselves the all clear.

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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8.

Jobless Claims Bump Up Week Over Week: 745K

2021-03-04 15:29:03 by Mark Vickery from Zacks

Thursday, March 4, 2021

Another Thursday morning, another Initial Jobless Claims report. Last week’s headline total rose to 745K from an upwardly revised 736K the week previous. Though still high historically, we see this number hovering amid the lows of the last 12 weeks. In fact, not since 711K reported in November have we seen new jobless claims as low as we have in the past two reports. The high range occurred directly following holiday shopping season, when the week of January 10th brought 927K new jobless claims.

Continuing Claims continued to trickle down in this morning’s report, from an unrevised 4.42 million in last week’s release to 4.30 million today. (These figures are from two weeks ago; Continuing Claims reports a week in arrears.) Unlike Initial Claims’ volatility of the past few months, Continuing Claims represent a steady downward arc. Then again, those who expire off Continuing Claims rolls currently get picked up by Pandemic Unemployment Assistance (PUA). Currently, 18 million Americans who might normally be in the workforce are currently not.

Nonfarm payrolls tomorrow morning are expected to fetch 210K new positions filled, more than 4x what January brought. But yesterday’s private-sector payroll data from ADP ADP posted just 117K new jobs, with Construction and Manufacturing reporting losses in February. We still await an historically large stimulus package from Congress in the coming weeks, which will no doubt change the calculus of the U.S. labor market, among other things, over time. These numbers measure where we’ve gotten toward the end of the “pandemic era.”

The final Q4 revision to U.S. Productivity bounced off its worst print since 1947 this morning, to -4.2% from -4.8% in the last revision. This is still nothing to write home about, unfortunately. That said, output grew 5.5% and hours worked rose 10.1%, which are both pieces of good news. Again, we will see a much different picture once stimulus is granted and implemented; until then, we are in slog-along productivity, even if we are off the previous read’s lows.

Unit Labor Costs, also a Q4 revision, fell to 6.0% from the 6.8% in the previous revision. This is notably lower than the 6.6% analysts were looking for. Tomorrow, in addition to nonfarm payroll headlines and a fresh Unemployment Rate, we will also get a look at figure like Average Hourly Earnings, which grew a disappointing 0.2% in the January report. The Average Work Week grew 0.3% to 35 hours — still notably below full-time employment.

Questions or comments about this article and/or its author? Click here>>

 

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9.

PREMIUM: Trading profitably and prudently as the world reopens

2021-03-04 12:55:00 by Yahoo Finance Video

With unprecedented monetary and fiscal stimulus as well as a new administration taking shape, trading opportunities are shifting with clearer winners and losers — yet volatility remains. Stephen "Sarge" Guilfoyle, President at Sarge986, joins Yahoo Finance's Jared Blikre to help navigate the emerging post-COVID trading landscape in stocks, bonds, commodities and cryptocurrencies. Focusing on trade selection and setups along with prudent risk management, viewers will also learn how to unlock the power of Yahoo Finance Premium.Not a subscriber? Start your free trial to join future webinars live!


10.

Influencers with Andy Serwer: Suze Orman

2021-03-04 11:00:00 by Yahoo Finance Video

In this episode of Influencers, personal finance expert Suze Orman joins Andy Serwer to discuss saving money during lockdown, her tips for tax season, and Suze's advice for young investors.


11.

Suze Orman: Americans should save their stimulus money

2021-03-04 10:00:00 by Yahoo Finance Video

Personal finance expert Suze Orman joins 'Influencers with Andy Serwer' with her thoughts on what Americans should do with their government stimulus checks.


12.

Stock market news live updates: Stocks end lower, Nasdaq slides by 2.7% as tech stocks sink further amid rising rates

2021-03-03 21:00:01 by Emily McCormick from Yahoo Finance

Stocks dipped Wednesday, extending losses from a day earlier as investors weighed optimism over widespread post-pandemic business reopenings against concerns over economic overheating.

[Click here to read what's moving markets heading into Thursday, March 4]

Technology stocks again endured a selloff, and the Nasdaq sank by 2.5% as investors rotated to cyclical shares poised to benefit from easing stay-in-place orders. Airlines, cruse lines and hotel stocks increased. The S&P 500 dipped by more than 1%, while the Dow erased earlier gains to trade near the flat line.

Treasury yields resumed advancing across the curve, and the yield on the benchmark 10-year Treasury note closed in on 1.5%. A disappointing report on private payrolls growth in February also weighed on many risk assets Wednesday, suggesting the labor market was still struggling to make headway amid the ongoing pandemic.

Elsewhere, shares of online mortgage provider Rocket Companies (RKT) pulled back during the pre-market session. The stock surged 71% to a record high on Tuesday and triggered a volatility halt after investors on Reddit appeared to target the heavily shorted stock as another short-squeeze candidate.

Investors this week have fixed their gaze on the next several months, when vaccine-enabled reopenings will help boost service-centric companies that had been heavily beaten down last year. President Joe Biden said that the U.S. now expects to have enough COVID-19 vaccines for all adults who want one by the end of May, pulling forward that target by two full months from the government's previous forecast. The drugmaker Merck (MRK) is set to help produce Johnson & Johnson's (JNJ) single-dose COVID-19 vaccine that was authorized over this past weekend, which would help speed the pace of inoculations in the U.S.

Plus, the U.S. Senate is debating the contours of another stimulus package worth up to $1.9 trillion this week, with congressional lawmakers racing to pass another relief bill before a mid-March cliff for federal unemployment benefits authorized under the last package.

At the same time, the likelihood of increased government spending alongside widespread business reopenings has raised the specter of both speedy growth in the U.S. economy, but also rising inflationary pressures. And last week's jump in Treasury yields – with the benchmark 10-year yield reaching a one-year high of 1.61% – remains fresh in the minds of investors, who have been eyeing the rise in interest rates as a possible hindrance to the recovery and deviation from last year's ultra-low borrowing costs backdrop.

"One of the fundamental underpinnings of strong equity performance the last six to nine months has been very low yields. And yields are not as low today as they were just a few weeks ago," Eric Winograd AllianceBernstein senior economist, told Yahoo Finance. "When we think about how that yield move will play out, the bond market takes a staircase up. You get sharp moves up and then a period when it moves sideways and consolidates, and then another sharp move higher. So I think we should expect that basic pattern to repeat a handful of additional times over the course of the next few quarters."

4:01 p.m. ET: Stocks end lower, Nasdaq sheds 2.7%

Here's where the three major indexes ended Wednesday's session:

  • S&P 500 (^GSPC): 3,819.83, -50.46 points (-1.3%)

  • Dow (^DJI): 31,272.44, -119.08 points (-0.38%)

  • Nasdaq (^IXIC): 12,997.75, -361.04 points (-2.7%)

2:04 p.m. ET: Fed says economic activity 'expanded modestly' from January to February: Beige Book

In the Federal Reserve's latest Beige Book, the central bank underscored that the U.S. economic recovery continued at an only moderate pace at the beginning of this year.

The Beige Book, or collection of anecdotes across the Fed districts released before each Fed meeting, noted that "Most businesses remain optimistic regarding the next 6-12 months as COVID-19 vaccines become more widely distributed."

"Economic activity expanded modestly from January to mid-February for most Federal Reserve Districts," according to the Beige Book, "Although a few Districts reported slight improvements in travel and tourism activity, overall conditions in the leisure and hospitality sector continued to be restrained by ongoing COVID-19 restrictions."

The Beige Book added that overall manufacturing activity "increased modestly" from the previous report from mid-January, and that employment levels across the U.S. "rose over the reporting period, albeit slowly."

12:53 p.m. ET: Stocks mixed, Nasdaq sheds more than 1% as tech rout extends further

The three major indexes traded mixed Wednesday during the afternoon session, with the Nasdaq falling by more than 1% for a second straight session as tech shares lagged.

The energy, financials and industrials sectors – all cyclical sectors poised to benefit from a strengthening economic backdrop — outperformed in the S&P 500, and crude oil jumped above $61 per barrel. The information technology sector lagged in the blue-chip index.

Boeing, JPMorgan Chase and American Express led the Dow's 0.3% advance Wednesday afternoon. Shares of Salesforce, Microsoft and Johnson & Johnson each pulled back in afternoon trading.

10:46 a.m. ET: Biden agrees to narrow eligibility for stimulus checks: Bloomberg

President Joe Biden agreed to bring down the eligibility limit for Americans qualifying for the $1,400 stimulus payments in the next pandemic relief package, Bloomberg first reported on Wednesday. Two Democratic sources confirmed the matter to Yahoo Finance.

With the new threshold, individuals earnings more than $80,000 would not qualify for the payments, down from the $100,000 cap in the earlier legislation. Couples earning more than $160,000 would not qualify, down from the $200,000 previously.

10:00 a.m. ET: Service sector activity unexpectedly slows in February: ISM

Activity in the U.S. service sector unexpectedly slowed down in February from a two-year high, according to the Institute of Supply Management's (ISM) monthly survey.

The service sector purchasing managers' index (PMI) ticked down to 55.3 in February from 58.7 in January, which had been the highest level since early 2019. Readings above the neutral level of 50.0 indicate expansion of a sector. Consensus economists were looking for the index to hold steady at 58.7, according to Bloomberg data. Still, the print marked the ninth straight month of expansion for service sector activity, which comprises the vast majority of overall U.S. economic activity.

9:31 a.m. ET: Stocks trade choppily, fluctuating between small gains and losses

Here's where markets were trading just after market open:

  • S&P 500 (^GSPC): 3,871.90, +1.61 points (+0.04%)

  • Dow (^DJI): 31,447.76, +56.24 points (+0.18%)

  • Nasdaq (^IXIC): 13,371.30, +8.71 points (+0.07%)

  • Crude (CL=F): $60.82 per barrel, +$1.07 (+1.79%)

  • Gold (GC=F): $1,707.00 per ounce, -$26.60 (-1.53%)

  • 10-year Treasury (^TNX): +5.9 bps to yield 1.474%

8:15 a.m. ET: Private payrolls rose less than expected in February: ADP

U.S. private employers added back fewer jobs than expected in February, disappointing economists who had anticipated that the early stages of the vaccine rollout and falling COVID-19 cases would allow hiring to pick up strongly during the month.

Private payrolls in the U.S. grew by 117,000 in February, ADP said in its closely watched monthly report Wednesday morning. This followed an upwardly revised gain of 195,000 payrolls in January, which had in turn reversed a drop of about 75,000 payrolls in December. Consensus economists expected a rise of 205,000 private payrolls for February, according to Bloomberg consensus data.

The report comes two days before the Labor Department's monthly jobs report. Consensus economists expected to see that non-farm payrolls rose by a net 195,000 in February, including a gain of 200,000 private payrolls.

7:12 a.m. ET: Stock futures aim for a rebound

Here's where markets were trading ahead of the opening bell on Wednesday:

  • S&P 500 futures (ES=F): 3,892.25, up 24.75 points or 0.64%

  • Dow futures (YM=F): 31,578.00, up 220.00 points or 0.7%

  • Nasdaq futures (NQ=F): 13,151.50, up 96.25 points or 0.74%

  • Crude (CL=F): $60.82 per barrel, +$1.07 (+1.79%)

  • Gold (GC=F): $1,722.70 per ounce, -$10.90 (-0.63%)

  • 10-year Treasury (^TNX): +3.1 bps to yield 1.446%

7:05 a.m. ET Wednesday: Mortgage applications increased only slightly last week as rates jumped

Mortgage applications were nearly unchanged last week as rising mortgage rates deterred purchases and refinances after a surge in housing market activity in 2020.

The Mortgage Bankers' Association's weekly index trading mortgage application volume rose just 0.5% during the week ended February 26 from the prior week. This followed a slump of 11.4% in mortgage application volume during the prior week. Refinances increased by 0.1% week-over-week but were still 7% higher than a year earlier. Purchases rose by 2% over the previous week and were 5% higher year-over-year, on an unadjusted basis.

“Mortgage rates jumped last week on market expectations of stronger economic growth and higher inflation. The 30-year fixed rate experienced its largest single-week increase in almost a year, reaching 3.23 percent – the highest since July 2020,” said Joel Kan, MBA associate vice president of economic and industry forecasting, said in a press statement.

Still, he added, “The housing market is entering the busy spring buying season with strong demand."

6:08 p.m. ET Tuesday: Stock futures open slightly higher

Here's where markets were trading Monday evening:

  • S&P 500 futures (ES=F): 3,873.00, up 5.5 points or 0.14%

  • Dow futures (YM=F): 31,414.00, up 56.00 points or 0.18%

  • Nasdaq futures (NQ=F): 13,080.50, up 25.25 points or 0.19%

NEW YORK, USA - MARCH 29: New York Stock Exchange building is seen at the Financial District in New York City, United States on March 29, 2020. New York is ranked as one of the largest International Financial Centres (
NEW YORK, USA - MARCH 29: New York Stock Exchange building is seen at the Financial District in New York City, United States on March 29, 2020. New York is ranked as one of the largest International Financial Centres ("IFC") in the world, now seen so quiet due the Covid-19 pandemic. (Photo by Tayfun Coskun/Anadolu Agency via Getty Images)
Anadolu Agency via Getty Images

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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13.

Who Are the ETF Giants?

2021-03-03 18:57:50 by Investopedia

ETFs are enjoying rapidly growing popularity, and Vanguard now has over $1 trillion under management, joining BlackRock at this elite level.


14.

Private employers added back 117,000 jobs in February, missing expectations: ADP

2021-03-03 13:15:27 by Emily McCormick from Yahoo Finance

U.S. private employers added back fewer jobs than expected in February, disappointing economists who had anticipated that the early stages of the vaccine rollout and falling COVID-19 cases would allow hiring to pick up strongly during the month.

Private payrolls in the U.S. grew by 117,000 in February, ADP said in its closely watched monthly report Wednesday morning. This followed an upwardly revised gain of 195,000 payrolls in January, which had in turn reversed a drop of about 75,000 payrolls in December. Consensus economists expected a rise of 205,000 private payrolls for February, according to Bloomberg consensus data.

"The modest 117,000 gain in the ADP measure of private payrolls for February, down from an upwardly revised 195,000 increase the month before, is a disappointment given that the drop-off in coronavirus case numbers and the resulting lifting of containment measures should be giving the economy a bigger shot in the arm," Paul Ashworth, chief U.S. economist for Capital Economics, wrote in a note Wednesday morning.

Service-providing businesses made more headway in recovering jobs last month. Across the private services sector, payrolls rose by 131,000 in February, led by a gain of 48,000 in trade, transportation and utilities industries. Education and health services payrolls followed with a rise of 35,000 payrolls, and leisure and hospitality jobs rose by 26,000. Within services, only information payrolls fell in February, though financial activities jobs registered no change.

Manufacturing and constructions jobs in the goods-producing sector dipped, however, as winter weather likely weighed in part on employment in these industries. Private construction jobs fell by 3,000 in February, while manufacturing payrolls fell by 14,000.

U.S. labor market data has been choppy over the past several weeks, as harsh winter weather in states like Texas weighed on hiring but also frustrated data collection for jobs report surveys, resulting in data that may understate the extent of the ongoing weakness in the labor market. Other recent reports showed signs of this noise: Weekly initial jobless claims spiked at the beginning of February to nearly 850,000 before falling precipitously to 730,000 last week.

NEW YORK, NY - FEBRUARY 05: People walk through a Manhattan neighborhood on February 05, 2021 in New York City. New government jobs numbers released on Friday showed that while 49,000 jobs were added in January, the United States economy is still down nearly 10 million jobs lost since before the pandemic. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - FEBRUARY 05: People walk through a Manhattan neighborhood on February 05, 2021 in New York City. (Photo by Spencer Platt/Getty Images)
Spencer Platt via Getty Images

But temporary factors aside, many economists say that the labor market remains on track for a more sustained recovery later this year, aided by the vaccine-enabled economic reopening.

“Certainly this was disappointing. Job growth has been softer in late 2020 and early 2021 than we would like coming out of the recession that we experienced last year,” Gus Faucher, PNC chief economist, told Yahoo Finance Live Wednesday morning. “That being said, I do expect to see much strong job growth later this year.”

“We are getting vaccine distribution, we’ve got this big stimulus bill that’s going through Congress, low interest rates from the Fed, better weather in the spring that will allow more outdoor activity,” he added. “So I think the job market is a little soft right now. But I would expect it’s going to see much better improvement as we head into the spring and summer this year.”

On Friday, the U.S. Labor Department will report the results of the "official" monthly jobs report for February. The ADP report has typically been an unreliable indicator of the results in the government report due to differences in survey methodology. In January, for instance, ADP showed a private payroll gain of 174,000 before revisions in its initial print, while the Labor Department showed private payrolls rose by a disappointing 6,000. With the ADP report, only individuals on an active payroll are counted as employed, while the Labor Department considers any individual that received a paycheck during the mid-month survey week for the report as employed.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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15.

SPACs are now a $700 billion market

2021-03-03 11:01:26 by Myles Udland from Yahoo Finance

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Wednesday, March 3, 2021

Goldman Sachs puts the SPAC boom in context.

Late last year, we wrote about David Kostin's equity strategy team at Goldman Sachs declaring 2020 the year of the SPAC.

In the few months since this report, the trend has only accelerated.

Kostin's team on Monday published their latest update on the space and the torrid pace with which these vehicles are coming to market.

And torrid might be an understatement.

Through February 26, some 175 SPAC sponsors have debuted on the public market raising a total of $56 billion. In all of 2020 — a record year for SPAC IPOs — some 223 SPAC sponsors came to market.

Data from SPAC Insider shows that through Tuesday, some 204 SPAC IPOs had come to market; on Tuesday alone, no fewer than 12 SPACs were announced, according to data from Street Insider. At this rate, 2020's record year for SPACs might be eclipsed by week end. SPAC Insider data shows that from 2009-2019, there were 226 total SPAC IPOs.

As a quick reminder, SPAC is an acronym that stands for Special Purpose Acquisition Company, often referred to as a "blank check" company. These are publicly-listed entities with shares that don't represent claims on the business of an underlying company, but instead reflect an ownership stake in a pool of capital that will later be deployed to acquire an existing business.

Back in January, we looked at SPACs as another micro-bubble, the likes of which have perked up in markets several times over the last few years. Goldman's data, however, shows that the capital behind these vehicles represents a much more potent market dynamic than speculative flows into 2017-era crypto projects or pot stocks.

"SPACs could generate more than $700 billion in acquisition activity in the next two years," Goldman writes. "We estimate $103 billion in SPAC capital is actively searching for an acquisition target. The aggregate ratio of target enterprise value at merger announcement to associated SPAC capital has been 7x this year, a jump from 6x in 2020 and just 3x during the 2010s. If the YTD ratio were to hold, SPACs would acquire firms worth more than $700 billion of [enterprise value]."

Given interest from clients and the broader markets, we'd expect Kostin and team to stay on this theme. And the chart below gives us the simplest way to think about what an implied value of the SPAC universe might be — just take the total amount of SPAC capital seeking an acquisition and multiply it by 7.

There is currently more than $100 billion of SPAC capital seeking an acquisition, and at current deal multiples this implies some $700 billion of potential value could be unlocked by these deals. (Source: Goldman Sachs)
There is currently more than $100 billion of SPAC capital seeking an acquisition, and at current deal multiples this implies some $700 billion of potential value could be unlocked by these deals. (Source: Goldman Sachs)

And while multiples on SPAC deals are going up, Goldman also finds that the value of companies taken public via this channel are rising as is the speed with which sponsors are deploying their capital.

So far this year, the average value of a company set to be taken public via SPAC is $2.9 billion, up from $1.7 billion last year and ~$800 million last decade, according to Goldman's data. Sponsors are also finding targets 175 days after their IPO, less than half the time sponsors spent searching in 2020 and down from an average of 487 days in the 2010s.

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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16.

Stock market news live updates: Stocks retreat after S&P 500's best session since June

2021-03-02 21:00:14 by Emily McCormick from Yahoo Finance

Stocks ended lower on Tuesday as the major indexes pulled back after rallying a day earlier.

[Click here to read what's moving markets heading into Wednesday, March 3]

Tech shares led the way lower and dragged the Nasdaq down 1.7%. A day earlier on Monday, the S&P 500 jumped by 2.4% for its best session since June 2020, while the Nasdaq jumped 3%. Shares of Zoom Video Communications (ZM), a darling of the "stay-at-home" trade, reversed overnight gains to slump more than 9% by market close even after the company delivered earnings results and guidance that far exceeded expectations, helping assuage fears of a slowdown as more in-person activities resume.

A combination of easing Treasury yields, optimism over Johnson & Johnson's (JNJ) newly authorized COVID-19 vaccine and prospects of another near $2 trillion stimulus package out of Congress helped buoy risk assets earlier this week following a late February rout. The U.S. Senate is set to begin debating the $1.9 trillion relief package that the House of Representatives advanced over the weekend this week, Senate Majority Leader Chuck Schumer said.

And the benchmark U.S. 10-year yield eased below 1.45% this week after swiftly climbing to a one-year high of as much as 1.6% just last week. Investors have been closing eyeing the rise in interest rates as a cause for concern for equities, with rates closely tied to borrowing costs for companies and consumers. Rising rates can also divert investor attention away from stocks by offering an alternative source of yield for investors.

Still, many strategists also noted that modestly rising rates from last year's ultra-low levels are not inherently problematic for stocks. And as Federal Reserve Chair Jerome Powell said late last month, rising rates and a steepening yield curve also serve as a sign of increasing optimism about the trajectory of the U.S. economy.

"I don’t think it’ll be an impediment for stocks to move forward as long as we see a move that’s commensurate on the economy," Michael Arone, State Street Global Advisors chief investment strategist, told Yahoo Finance of February's jump in the 10-year Treasury yield. "So as long as the economy continues to accelerate [and] rebound, earnings figures continue to come in solidly, I think that will allow us to tolerate higher interest rates. I think the real concern is that if the economy begins to slow down or the recovery isn’t as robust as expected, I think that’ll be the real challenge."

4:01 p.m. ET: Stocks end lower, Nasdaq sinks 1.7% as tech stocks resume rout

Here's where the three major indexes ended Tuesday's session:

  • S&P 500 (^GSPC): 3,870.36, -31.46 points (-0.81%)

  • Dow (^DJI): 31,390.47, -145.04 points (-0.46%)

  • Nasdaq (^IXIC): 13,358.79, -230.04 points (-1.69%)

2:50 p.m. ET: Rocket Companies shares skyrocket, reaching a record high as highly shorted stock gains traction among social media investors

Rocket Companies (RKT), the consumer financial tech company and parent of Quicken Loans and Rocket Mortgage, soared to a record high on Tuesday, triggering a trading halt as the heavily shorted stock was cited as a possible target of investors on social media platforms like Reddit.

Shares were halted for volatility on the New York Stock Exchange between 2:10 and 2:15 E.T. on Thursday, after rising as much as 74% to a record high of $42.17 apiece.

"RKT’s stock price and short selling activity is reminiscent of another recent high flying meme stock – GameStop Inc (GME). Both stocks saw their share price spike due to high retail buying interest (predominantly due to significant social media activity) and an options based gamma squeeze," S3 Analytics said in a note Tuesday. "Both stocks also had/have relatively high short interest and high stock borrow rates which imply strong short selling demand and very limited stock borrow supply."

11:04 a.m. ET: Stocks erase gains to trade lower

The three major indexes fell Tuesday intraday, erasing modest gains from early on during the session.

The materials and energy sectors were the only sectors in positive territory in the S&P 500, while the real estate, information technology and utilities sectors sharply underperformed. Caterpillar, Apple and Microsoft each dropped more than 1% in the Dow, dragging the index lower. The Nasdaq shed 0.7%, underperforming against the S&P 500 and Dow as Big Tech stocks gave back some of Monday's gains.

The small-cap Russell 2000 also unwound some of Monday's advance, dropping about 0.9%. Still, the index is up more than 15% for the year-to-date, with small cap stocks surging earlier this year amid optimism about a strong economic recovery.

9:37 a.m. ET: 'Clients bought the dip last week': Bank of America

Traders heeded the time-honored tradition of "buying low" last week, pouring into stocks as the major indexes retreated, according to data from Bank of America.

"Clients bought the dip last week," the firm said in a note Tuesday. "$2.8B [billion] of equity inflows by our clients were in the 95th percentile of weekly flows (since 2008), with net purchases of single stocks and ETFs each in excess of $1.5B."

"Specifically, clients bought the Tech dip, with net buys of Tech stocks the largest of any week since Nov. 2019 and with inflows across all three client groups," BofA added, with those three client groups comprising institutions, hedge funds and private clients.

9:30 a.m. ET: Stocks open slightly higher

Here's where markets were trading just after the opening bell Tuesday morning:

  • S&P 500 (^GSPC): 3,905.14, +3.32 points (+0.09%)

  • Dow (^DJI): 31,581.35, +45.84 points (+0.15%)

  • Nasdaq (^IXIC): 13,595.73, +6.9 points (+0.05%)

  • Crude (CL=F): $61.02 per barrel, +$0.38 (+0.63%)

  • Gold (GC=F): $1,726.30 per ounce, +$3.30 (+0.19%)

  • 10-year Treasury (^TNX): -1.2 bps to yield 1.434%

7:45 a.m. ET: Kohl's and Abercrombie & Fitch top 4Q earnings estimates as apparel retailers bounce back after difficult 2020

Kohl's (KSS) and Abercrombie & Fitch (ANF) each reported fourth-quarter earnings Tuesday morning that beat consensus expectations, as the consumer shift from service-based to goods-based spending helped lift results at the apparel retailers.

Kohl's adjusted earnings of $2.22 per share grew from $1.99 over last year, and easily topped estimates for 98 cents per share, based on Bloomberg consensus data. More prudent cost-cutting helped the company increase its profitability despite a drop in revenue, with sales down 10% to $5.88 billion during the three months ending in January. For the full year 2021, net sales are expected to return to growth in the mid-teens percentage range over the prior year, and earnings per share will come in between $2.45 and $2.95, the company said. Shares rose slightly in early trading.

Meanwhile, Abercrombie & Fitch posted adjusted earnings of $1.50 per share, also growing over last year and exceeding the $1.24 consensus estimate. Net sales decreased 5% to $1.12 billion, matching estimates. Like many other retailers, Abercrombie saw another jump in digital sales, with e-commerce revenue rising by 34%. Shares jumped more than 2% in early trading.

7:37 a.m. ET: Target 4Q sales soar past estimates, with big box retailer boosted by consumers' bulk-shopping

Target (TGT) posted fourth-quarter results that handily exceeded expectations, extending a streak of soaring growth as consumers during the pandemic opted for big box stores where they could find all their shopping needs in one spot.

Comparable sales jumped 20.5% in the fourth quarter, coming in multiples above the 1.5% growth posted during the same quarter last year, and topping consensus estimates for 17.5% growth. Comparable digital sales soared 118%, more than doubling for a fourth straight quarter. And on the bottom line, adjusted earnings per share from continuing operations rose to $2.67, exceeding estimates for $2.49.

Following the banner growth in 2020, Target declined to provide revenue and earnings guidance for the current year and beyond due to uncertainty around COVID-19. Shares fluctuated between small gains and losses in early trading.

7:23 a.m. ET Tuesday: Stock futures erase overnight advances, pointing to a lower open

Here's where markets were trading with about two hours to go until the opening ball on Wall Street:

  • S&P 500 futures (ES=F): 3,891.00, down 7.75 points or 0.2%

  • Dow futures (YM=F): 31,474.00, down 35 points or 0.11%

  • Nasdaq futures (NQ=F): 13,249.00, down 30.75 points or 0.23%

  • Crude (CL=F): $60.74 per barrel, +$0.10 (+0.16%)

  • Gold (GC=F): $1,727.60 per ounce, +$4.60 (+0.27%)

  • 10-year Treasury (^TNX): unchanged to yield 1.446%

6:17 p.m. ET Monday: Stock futures open higher to extend earlier advances

Here's where markets were trading Monday evening:

  • S&P 500 futures (ES=F): 3,905.5, up 6.75 points or 0.17%

  • Dow futures (YM=F): 31,560.00, up 51.00 points or 0.16%

  • Nasdaq futures (NQ=F): 13,321.25, up 41.50 points or 0.31%

People walk past the New York Stock Exchange (NYSE) at Wall Street on February 17, 2021 in New York City. - Wall Street stocks retreated early Wednesday as worries about potentially higher inflation accompanied much better-than-expected US retail sales. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
People walk past the New York Stock Exchange (NYSE) at Wall Street on February 17, 2021 in New York City. - Wall Street stocks retreated early Wednesday as worries about potentially higher inflation accompanied much better-than-expected US retail sales. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
ANGELA WEISS via Getty Images

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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17.

American manufacturing is roaring back

2021-03-02 11:02:28 by Myles Udland from Yahoo Finance

This article first appeared in Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Tuesday, March 2, 2021

Manufacturing activity surges to a three-year high

The U.S. economic recovery continues to be led by manufacturing.

On Monday, IHS Markit and the Institute for Supply Management both released manufacturing activity data for February, with these reports showing the sector growing at the fastest pace in several years.

The ISM's manufacturing PMI registered a reading of 60.8, the highest reading in three years and the fastest since the pandemic recovery began. IHS Markit's reading came in at 58.6, the second-best reading for this index in the last 11 years; only January's reading was better. Readings over 50 for either index indicate expansion within the sector while readings below 50 indicate contraction.

And while the headline reading for both reports result in slightly different historical superlatives, both readings say the same thing about the U.S. manufacturing sector right now — businesses simply cannot keep up with this recovery. And notable pressures exist in both the pricing and delivering of goods right now.

The ISM's prices index surged to 86 last month, the highest level since June 2008, while the backlog of orders index hit its highest level in 17 years. The ISM's supplier deliveries index also hit 72, a reading topped only by a 76 back in April that served as a multi-decade high. IHS Markit's report indicated the longest increase for delivery wait times on record while input prices rose at the fastest rate since 2011.

Taken together, these readings make clear that manufacturers in the U.S. broadly face higher costs while unfilled orders pile up and components to make finished products remain delayed.

A set of circumstances that would suggest an inflationary environment is upon us while a robust recovery is ready to be fully unleashed if supply disruptions are able to abate.

"The manufacturing economy continued its recovery in February," said Tim Fiore, chair of the ISM's manufacturing business survey committee. "Issues with absenteeism, short-term shutdowns to sanitize facilities, and difficulties in hiring workers remain challenges and continue to cause strains that limit manufacturing-growth potential. Optimistic panel sentiment increased, with five positive comments for every cautious comment, compared to a 3-to-1 ratio in January."

Chris Williamson, chief business economist over at IHS Markit, said this data, "suggests that the US manufacturing sector is close to fully recovering the output lost to the pandemic last year."

Williamson adds that, "a renewed surge in optimism suggests the recovery has much further to run. Business expectations about the year ahead jumped to a level only exceeded once over the past six years, buoyed by a cocktail of stimulus and post-COVID recovery hopes as life continues to return to normal amid vaccine roll outs."

And commentary from industry executives in the ISM's report colorfully illustrates the economy's current challenge of navigating a "some good, some bad" environment.

"Things are now out of control," said a contact in the electrical equipment, appliances & components sector currently being squeezed by a global chip shortage. "Everything is a mess, and we are seeing wide-scale shortages.”

“Prices are going up, and lead times are growing longer by the day," said another contact in the machinery space. "While business and backlog remain strong, the supply chain is going to be stretched very [thin] to keep up."

And so as economic data continues to surprise to the upside, it seems right now that the biggest challenge to growth in 2021 will be whether industrial supply chains can keep up with demand. A good problem to have after a decade spent worrying about secular stagnation and the end of demand-driven growth cycles.

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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18.

Stock market news live updates: Stocks rally as tech shares rebound, S&P 500 jumps 2.4% in best session since June 2020

2021-03-01 21:00:11 by Emily McCormick from Yahoo Finance

U.S. stocks staged a rebound rally on Monday, with each of the S&P 500, Dow and Nasdaq jumping as retreating Treasury yields and vaccine optimism boosted risk assets.

[Click here to read what's moving markets heading into Tuesday, March 2]

The S&P 500 surged by more than 2% in its best session since June 2020, and the Nasdaq and small-cap Russell 2000 outperformed with gains of more than 3% each. The financials, information technology and industrial sectors led the S&P 500's comeback after a bout of volatility last week. A sell-off in tech shares sent the Nasdaq down 4.9% last week for its worst weekly performance since October.

But the move higher in risk assets on Monday coincided with steadying across the Treasury yield curve, after central bank officials from the Bank of England to the Reserve Bank of Australia echoed sentiments from the U.S. Federal Reserve and doubled down on commitments to maintain an accommodative policy posturing throughout the global economic recovery.

The yield on the 10-year note retreated to hover below 1.45% after spiking to a one-year high of 1.61% last week. The excessively swift rise in interest rates spooked equity investors last week, with rates impacting a range of both corporate and consumer borrowing costs.

"One key reason for the importance that investor ascribed to expected future growth was the extremely low level of interest rates. As rates have risen, the contribution of equity duration to stock valuations has declined while near-term growth profiles have become more important," Goldman Sachs strategist David Kostin wrote in a note. "Practically, this means that both the improving growth outlook and rising rates have supported the outperformance of cyclicals and value stocks relative to stocks with the highest long-term growth."

Meanwhile, vaccine optimism also helped boost the major stock indexes. A U.S. Food and Drug Administration panel issued an emergency use authorization for Johnson & Johnson's (JNJ) single-dose coronavirus vaccine with unanimous backing, making it the third shot approved for use in the U.S. The company has already begun shipping its COVID-19 vaccine and expects to deliver more than 100 million doses of the single-shot vaccines during the first half of 2021, including more than 20 million by the end of March. Shares of Johnson & Johnson, a Dow component, jumped more than 2% in early trading.

On the stimulus front, the House of Representatives over the weekend advanced a $1.9 trillion COVID-19 stimulus package, which included $1,400 direct checks to most Americans, $400 per week in augmented federal unemployment insurance and $350 billion in state, local and tribal government relief, among other measures. The bill heads to the U.S. Senate, with many lawmakers aiming to pass the bill within the next two weeks, before a mid-March cliff when current pandemic-era federal unemployment benefits are set to expire.

4:04 p.m. ET: Stocks end sharply higher, S&P 500 posts best day since June 2020 while Nasdaq jumps 3%

Here's where markets were trading shortly after noon in New York:

  • S&P 500 (^GSPC): 3,901.82, +90.67 points (+2.38%)

  • Dow (^DJI): 31,535.58, +603.21 points (+1.95%)

  • Nasdaq (^IXIC): 13,588.83, +396.48 points (+3.01%)

12:04 p.m. ET: Stocks surge, Nasdaq gains 2.5%

Here's where markets were trading shortly after noon in New York:

  • S&P 500 (^GSPC): 3,899.88, +88.73 points (+2.33%)

  • Dow (^DJI): 31,605.99, +673.62 points (+2.18%)

  • Nasdaq (^IXIC): 13,525.51, +333.43 points (+2.53%)

  • Crude (CL=F): $61.44 per barrel, -$0.06 (-0.1%)

  • Gold (GC=F): $1,733.30 per ounce, +$4.50 (+0.26%)

  • 10-year Treasury (^TNX): -1.8 bps to yield 1.438%

10:38 a.m. ET: Manufacturing sector activity surged in February by the most in three years: ISM

Activity in the domestic manufacturing sector jumped by the most in three years, boosted by a rise in prices paid for raw materials.

The Institute for Supply Management's (ISM) manufacturing index jumped to a reading of 60.8 in February from 58.7 in January. Consensus economists were looking for a tick higher to just 58.9, according to Bloomberg consensus data. Readings above the neutral level of 50 indicate expansion in a sector.

10:30 a.m. ET: Construction spending reaches record high in January amid economic rebound, strong housing market

U.S. construction spending jumped more than expected to reach a record level in January, as construction projects picked up strongly as the economy recovered from the pandemic, and as housing activity remained robust.

Construction spending increased by 1.7% to $1.521 trillion, according to the Commerce Department's monthly report for January, with that level marking the greatest since the start of the government series in 2002. December's construction outlays were revised up to show a 1.1% increase, from the 1.0% rise previously reported. The January jump was more than double the 0.8% rise expected.

Residential projects were an exceptional contributor to the January gain, with spending on these projects rising by 2.5% following a 3.8% jump in December.

9:42 a.m. ET: Bullishness on equities is creeping higher, sending Bank of America's contrarian indicator inches closer still to a 'Sell' signal

Bank of America's Sell Side Indicator, a gauge of bullishness of Wall Street, increased further last month to close in on what the firm considers to be a "sell" signal for equities.

The Sell Side Indicator tracks the average recommended equity allocation by sell-side strategists, with a higher reading serving as a signal of froth and over-exuberance in markets and thereby an indication to sell equities, according to Bank of America. For now, the indicator remains in "Neutral" territory.

"Wall Street strategists continued to increase their recommended equity allocations in February," Bank of America strategist Savita Subramanian wrote in a note Monday morning. The Sell Side Indicator "rose by nearly 1ppt [percentage point] to 59.2% from 58.4%."

"It's the second month in a row of an almost 1ppt jump, bringing recommended equity allocation to almost a 10 year high and just 1.1ppt shy of a 'Sell' signal," Subramanian added. "The last time the indicator was this close to "Sell" was June 2007 after which we generally saw 12-month returns of -13%."

9:31 a.m. ET: Stocks open sharply higher, recovering after last week's losses

Here's where markets were trading just after the opening bell Monday morning:

  • S&P 500 (^GSPC): 3,854.25, +45 points (+1.18%)

  • Dow (^DJI): 31,276.00, +364.00 points (+1.18%)

  • Nasdaq (^IXIC): 13,081.25, +170.25 points (+1.32%)

  • Crude (CL=F): $61.60 per barrel, +$0.10 (+0.16%)

  • Gold (GC=F): $1,739.00 per ounce, +$10.20 (+0.59%)

  • 10-year Treasury (^TNX): -2.5 bps to yield 1.431%

7:16 a.m. ET: Monday: Stock futures point to a higher open

Here's where markets were trading ahead of the opening bell Monday morning:

  • S&P 500 futures (ES=F): 3,846.50, up 37.25 points or 0.98%

  • Dow futures (YM=F): 31,190.00, up 278 points or 0.9%

  • Nasdaq futures (NQ=F): 13,064.50, up 153.5 points or 1.19%

  • Crude (CL=F): +$0.60 (+0.98%) to $62.10 a barrel

  • Gold (GC=F): +$14.40 (+0.83%) to $1,743.20 per ounce

  • 10-year Treasury (^TNX): -2.7 bps to yield 1.429%

A statue of George Washington is seen on Wall St. across from the New York Stock Exchange (NYSE) in New York, U.S., February 16, 2021. REUTERS/Brendan McDermid
A statue of George Washington is seen on Wall St. across from the New York Stock Exchange (NYSE) in New York, U.S., February 16, 2021. REUTERS/Brendan McDermid
Brendan McDermid / reuters

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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19.

This closely watched stock market indicator nears a sell signal

2021-03-01 18:39:27 by Brian Sozzi from Yahoo Finance

The market may be in rally mode to kick off March, but a challenging February brought on by a rising 10-year yield is still fresh in the minds of a mostly bullish Wall Street.

A new note out of Bank of America Global Research on Monday will do nothing to alleviate the fresh concerns of the bulls.

BofA's Sell Side Indicator — which is the average recommended equity allocation by sell-side strategists — gained by about one percentage point to 59.2% in February from 58.4% in January. It's the second month in a row of a roughly one percentage point increase. At its current level, the recommended equity allocation is near a 10-year high and just shy of a "sell" signal, says BofA equity and quant strategist Savita Subramanian.

Subramanian points out the last time the indicator was this close to a sell signal was June 2007 — the market then went onto see 12-month returns of 13%.

"The indicator still remains in "Neutral" territory where it has been since December 2016. Although returns are less predictable when the indicator is "Neutral" compared to extreme "Buy" or "Sell" levels, when the indicator is at or below current levels, subsequent 12-month returns have historically been positive 89% of the time," Subramanian says. "While encouraging, the current level is forecasting 12-month returns of just 7%, a much weaker outlook compared to an average 12-month forecast of 16% since the end of the global financial crisis. However, past performance is not an indication of future results."

Even with a tough February for markets and the pandemic continuing to weigh on global growth, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite are all up more than 10% over the past six months. So it's not a surprise to see BofA's indicator reach a worrisome level given the supreme bullishness of the Street alongside a highly uncertain global economic recovery.

Subramanian joins others on the Street sending up a red flag on stock prices near record valuations because of the rise in yields.

"Other signs that suggests a weaker market outlook are rising yields, which pressure the TINA (There is No Alternative) argument and valuation. History suggests that 1.75% on the 10-year (the house forecast and ~25 basis points above current levels) is the tipping point at which asset allocators begin to shift back to bonds," Subramanian says.

BofA's Sell Side Indicator is in good company right now in hinting stocks are overvalued and overdue for an extended breather after a rally off the COVID-19 2020 lows.

Warren Buffett's favorite indicator — which takes the Wilshire 5000 Index (viewed as the total stock market) and divides it by the annual U.S. GDP — is still hovering around a record high. The Buffett Indicator — as it's known — stands at about 187.5% — up sharply from 175% or so when applying third quarter GDP data per GuruFocus.

The indicator remains in "significantly overvalued" territory, according to GuruFocus.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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20.

The truth about Warren Buffett’s investment track record

2021-03-01 11:38:29 by Sam Ro from Yahoo Finance

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Monday, March 1, 2021

Warren Buffett has had years of underperformance and a lot of bad stock picks

Warren Buffett, the billionaire head of Berkshire Hathaway (BRK-A, BRK-B), will probably go down as the greatest investor in history.

For more than half a century, he's been responsible for the performance of Berkshire and its legendary stock portfolio, which have long track records of market-beating returns.

But here's what every serious investor needs to know about Buffett: despite above-average performance, there have been many years Berkshire underperformed the market and there have been many individual stock trades that have lost mountains of money.

Long-term outperformance comes with many years of underperformance

Warren Buffett's annual letter to Berkshire shareholders was released on Saturday, and as usual the first page compares the annual performance of Berkshire against that of the S&P 500 (^GSPC) since 1965.*

Berkshire shares have seen an average annual return of 20.0% compared to the S&P 500's 10.2% gain during that period.

But as you can see from the individual data points, there are many years when the S&P outperformed Berkshire.

A good long-term investment strategy will not produce desired returns year in and year out. Rather, it'll make progress toward some long-term goal over time as fat years more than offset lean years.

"Whatever today’s figures, Charlie Munger, my long-time partner, and I firmly believe that, over time, Berkshire’s capital gains from its investment holdings will be substantial," Buffett wrote on Saturday.

Furthermore, it's worth noting that neither Berkshire nor the S&P saw many years where they delivered an average return. Most years either saw massive gains or very disappointing performance. Average almost never happens in markets.

Great stock pickers pick a lot of losers

And just because Buffett may be one of the greatest stock pickers in history doesn't mean all of his stock picks have been winners over time.

Just a quick glance at Berkshire's current top 15 stock investments reveals plenty of positions that are held below cost (i.e. they've lost money).

Berkshire's top 15 equity holdings includes winners and losers. (Berkshire Hathaway)
Berkshire's top 15 equity holdings includes winners and losers. (Berkshire Hathaway)
Yahoo Finance

To his credit, few people are more vocal about Buffett's mistakes than Buffett himself.

In 2020, Berkshire booked a $9.8 billion write-down on those assets. One massive "mistake"he discussed in his annual letter was Precision Castparts (PCC), a once publicly-traded company that Berkshire acquired outright in 2016 in a $37 billion deal.

"I paid too much for the company," Buffett wrote. "I believe I was right in concluding that PCC would, over time, earn good returns on the net tangible assets deployed in its operations. I was wrong, however, in judging the average amount of future earnings and, consequently, wrong in my calculation of the proper price to pay for the business."

"PCC is far from my first error of that sort," he added. "But it’s a big one."

It's not hard to find times Buffett lost money on a trade or missed out on a big opportunity. Just a year ago, Berkshire dumped airline stocks near their lows just before they roared back along with the other reopening trades.

But a successful investor shouldn’t be judged by his or her mistakes. Rather, they should be judged by the degree to which they are able to achieve their long-term goals.

This goes for all investors who will repeatedly buy too late, sell too early, and miss out on big opportunities that become obvious in hindsight.

So if you're making a lot of mistakes but have a sound strategy and the discipline to stick to it during periods of underperformance, then maybe you too can be as imperfectly successful as Warren Buffett.

*Since 2019, Buffett has presented Berkshire's performance as measured by market value. Prior to that, it was book value. Buffett made the change because he felt market value was going to better reflect the performance of the company. For our purposes, all you need to know is that both Berkshire's book value and market value have smoked the S&P 500 over that half-century.

By Sam Ro, managing editor. Follow him at @SamRo

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21.

February jobs report, Zoom earnings: What to know in the week ahead

2021-02-28 13:52:24 by Emily McCormick from Yahoo Finance

After last week's volatile bout of stock trading, investors this week are set to focus on new labor market data, as well as a dwindling batch of quarterly earnings results.

The U.S. Labor Department's February jobs report set for release on Friday will be one of the main reports of the week, offering a fresh look at the state of the labor market recovery after back-to-back disappointments in each of the January and December reports.

Consensus economists are expecting to see that non-farm payrolls rose by 150,000 in February, accelerating from the tepid gain of 49,000 a month earlier. The unemployment rate likely ticked up to 6.4% from 6.3%, though any increase could be in part the result of rising labor force participation as unemployed Americans resume their job searches in anticipation of more business reopenings.

In December and January, service-related jobs bore the brunt of payroll declines, as a resurgence in new COVID-19 cases around the holidays led to new social distancing restrictions that weighed on jobs in high-contact fields. Leisure and hospitality payrolls dropped by 61,000 in January, following a plunge of more than half a million in December.

However, COVID-19 new cases and hospitalizations have fallen precipitously after a spike at the beginning of the year, allowing some restrictions to ease. The February jobs report will likely reflect a pick-up in employment as a result of these improving virus-related trends.

"We expect leisure and hospitality employment to increase based on restaurant activity data and also look for modest rebounds in other industries, consistent with high-frequency data on jobless claims and alternate employment indicators," Nomura economist Lewis Alexander wrote in a note Friday.

"However, the report will likely still show some pockets of weakness. Cold temperatures during the survey week, ahead of the disruptions that affected a large swathe of the country in mid-February, likely weighed on construction employment," he added. "Moreover, seasonal distortions that boosted private and state and local educational employment in January will likely result in employment declines for those industries in February."

"Altogether, we expect the February employment report to show increasing labor market strength, but believe a swifter recovery is more likely to take hold later this year as vaccinations continue," Alexander said.

Construction workers free a building construction site of snow in the Brooklyn Borough of New York on February 2, 2021. - A huge snowstorm has brought chaos to the United States' east coast, shuttering airports, closing schools and forcing the postponement of coronavirus vaccinations into Tuesday morning as New York City steeled itself for possibly one of its heaviest ever snowfalls. New York declared a state of emergency restricting non-essential travel, moved all children back to remote learning and rescheduled long-awaited vaccine shots as some parts of the city were hit by more than 18 inches (1.5 feet) of snow. CNN meteorologists said that figure could reach two feet before the storm comes to an end. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
Construction workers free a building construction site of snow in the Brooklyn Borough of New York on February 2, 2021. (Photo by ANGELA WEISS/AFP via Getty Images)
ANGELA WEISS via Getty Images

Indeed, the U.S. economy as a whole remains about 9.9 million payrolls short of its pre-pandemic levels from February 2020, and the unemployment rate remains well above February 2020's 50-year low of 3.5%.

Other economists have suggested the actual state of the labor market is even worse than the headline data suggests.

"If you count in addition to the almost 10 million who are registered as unemployed, if you add in the 4 million who have dropped out of the labor force — for health reasons, because they have child care responsibilities — and 2 million people who have reduced hours or pay, we’re looking at an unemployment rate that really is close to 10%," Treasury Secretary Janet Yellen told New York Times reporter Andrew Ross Sorkin last week.

The still-weak labor market has served as particularly strong impetus for lawmakers to remain highly supportive in their policy decisions. Federal Reserve Chair Jerome Powell reiterated in his semiannual monetary policy testimony before Congress last week that the economy is "a long way from our employment and inflation goals," and that it would likely take "some time for substantial further progress to be achieved." Those remarks suggested the Federal Reserve would maintain its highly accommodative monetary policy stance, with interest rates near zero and asset purchases at a massive rate of $120 billion per month.

And extending direct support for those still unemployed due to the pandemic remains a key near-term concern for congressional lawmakers. Federal unemployment benefits authorized under the latest $900 billion virus relief package in December are poised to expire in mid-March, which could leave millions of Americans without aid to weather the next several months before vaccines are more widely distributed.

Zoom earnings

Quarterly results from one of the darlings of the stay-at-home trade are on deck this week.

Zoom Video Communications (ZM) is slated to report fiscal fourth-quarter results after market close on Monday. With many workers set to begin returning to their offices later this year, the specter of slowing growth remains a key concern.

Zoom, once a little-known tech service before the pandemic, has grown revenue in excess of 300% in each of the last two quarters, as the meeting software became the go-to platform for workplaces, friends and families to stay connected and schools to conduct remote learning. Customers with more than 10 employees jumped by 485% and 458%, respectively, in its October and July quarters.

The video conferencing company is expected to extend this streak of strong growth for the fourth quarter, with sales anticipated to rise 331% to $811.04 million in the three months ended in January, according to Bloomberg consensus data. However, this would still mark a deceleration from the previous quarter's 367% top-line growth, and Zoom's guidance at the time for the fourth-quarter slowdown had led to a swift sell-off in December.

"Given the uncertainty around the timing of reopening and impact to churn rates ... we anticipate relatively conservative guidance that implies FY22 ending annualized run rate growth (best proxy for new business) likely in line with current Street expectations of +12% year-over-year," Credit Suisse analyst Brad Zelnick wrote in a note on Friday. "We believe this slowdown in forward-looking metrics is inevitable given Zoom’s current scale."

UKRAINE - 2021/02/01: In this photo illustration a Zoom Video Communications, Inc. logo is seen displayed on a smartphone screen. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
UKRAINE - 2021/02/01: In this photo illustration a Zoom Video Communications, Inc. logo is seen displayed on a smartphone screen. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
SOPA Images via Getty Images

At the same time, rapid expansion in Zoom's newer Zoom Phone cloud-based phone platform may help buoy the business even as adoption of the flagship meeting software moderates. Zoom Phone reached 1 million seats in January, or within two years of launch, and expanded its global coverage of the service to 44 countries.

"While Zoom Phone will help offset a slowdown in Zoom Meetings growth, we believe current expectations already embed meaningful adoption of Zoom Phone," Zelnick added.

Zelnick rated Zoom as Underperform based on valuation, following the stock's run-up of nearly 400% in 2020. However, the stock traded roughly flat for the month of February, as investors rotated away from the high-growth tech stocks that had so strongly outperformed during the pandemic last year.

Earnings Calendar

  • Monday: Workhorse Group (WKHS) before market open; Zoom Video Communications (ZM), Novavax (NVAX), Clover Health Investments (CLOV), Nio (NIO) after market close

  • Tuesday: Kohl's (KSS), Target (TGT) before market open; Nordstrom (JWN), Box Inc. (BOX) after market close

  • Wednesday: Dollar Tree (DLTR) before market open; Okta (OKTA), Snowflake (SNOW), Vroom Inc (VRM), Splunk (SPLK) after market close

  • Thursday: Kroger (KR) before market open; Opendoor Technologies (OPEN), Broadcom (AVGO), SmileDirectClub (SDC), Costco (COST), The Gap (GPS) after market close

  • Friday: N/A

Economic Calendar

  • Monday: Markit US Manufacturing PMI, February final (58.5 expected, 58.5 in prior print); Construction spending month-over-month, January, (0.8% expected, 1.0% in December); ISM Manufacturing index, February (58.6 expected, 58.7 in January)

  • Tuesday: Ward Total Vehicle Sales, February (16.40 million expected, 16.63 million in January)

  • Wednesday: MBA Mortgage Applications, week ended February 26 (-11.4% during prior week); ADP Employment Change, February (170,000 expected, 174,000 in January); Markit US Composite PMI, February final (58.8 in prior print); Markit US Services PMI, February final (58.9 expected, 58.9 in prior print); ISM Services Index, February (58.6 expected, 58.7 in January)

  • Thursday: Challenger Job Cuts, February (17.4% in January); Initial jobless claims, week ended February 27 (793,000 expected, 730,000 during prior week); Continuing claims, week ended February 20 (4.419 million during prior week); Factory orders, January (1.3% expected, 1.1% in December)

  • Friday: Change in non-farm payrolls, February (150,000 expected, 49,000 in January); Unemployment rate, February (6.4% expected, 6.3% in January); Average hourly earnings, month-over-month, (0.2% expected, 0.2% in January); Labor force participation rate, February (61.4% in January); Trade Balance, January (-$67.5 billion expected, -$66.6 billion in December); Consumer credit, January ($12.000 billion expected, $9.734 billion in December)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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22.

Retail traders say they're not going anywhere

2021-02-26 11:05:14 by Myles Udland from Yahoo Finance

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Friday, February 26, 2021

The retail rally is real. And it's not going away.

The biggest and perhaps most surprising markets story of this pandemic is the huge surge in retail participation.

The narrative behind this trade has taken on many forms since stay-at-home orders were put in place last spring and then unevenly rescinded and reinstated. We've heard that retail's participation is being driven by stimulus checks. Boredom. A lack of sports betting. An inability to travel. The market going up a lot. Stimulus checks again. More boredom. And the market still going up. In something approximating that order.

And while some Wall Street strategists questioned for months the role retail traders were playing in the market's spring and summer rally, the strategy team at Deutsche Bank didn't waver in its conviction that retail was playing a large role of this rally.

And the results of a recent survey from the firm point to a retail bid that is persistent and plans to stick around when the pandemic is behind us.

"A key question is if the surge in equity investment will sustain as the economy reopens," Deutsche Bank strategists led by Parag Thatte wrote in a note to clients published Wednesday. "For their part, retail investors say they expect to maintain or add to their stock holdings even as the economy reopens, with younger respondents saying they are even more likely to do so."

And as the chart below from Deutsche Bank shows, more than half of respondents from every income bracket and more than 58% of respondents in all three age groups covering those between 18 and 54 years old say they will invest more when the pandemic is over.

A majority of respondents to a recent Deutsche Bank survey said they would invest even more in the market when things return to their pre-pandemic normal. (Source: Deutsche Bank)
A majority of respondents to a recent Deutsche Bank survey said they would invest even more in the market when things return to their pre-pandemic normal. (Source: Deutsche Bank)

Earlier this month, we highlighted work from Goldman Sachs which perhaps sheds some light on why retail traders are so sure they want to stick around — because they are making money.

As Goldman's work showed, even before the rally in so-called meme stocks like AMC (AMC), GameStop (GME), and others crescendoed in late January, there'd been a persistent outperformance in stocks favored by retail traders since May.

And in case you thought the bit of volatility we've seen in the market this week might shake this new retail cohort of their conviction in this market, Deutsche Bank's survey has a data point for that.

"When faced with a hypothetical selloff, whether small or large, on net more respondents said they would put more money into the stock market," according to Deutsche Bank. "New investors faced with small selloffs report they will put more money in, but would pull money out on net if the selloff were larger than 10%."

A few percentage points more and perhaps we'll find out how strong retail's stomach really is.

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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23.

YF Spotlight: American educators search for common ground on school reopening

2021-02-26 11:00:00 by Yahoo Finance Video

Yahoo Finance takes a deep dive into remote education and how it's impacting teachers and students across America.


24.

These Nasdaq 100 stocks fell the most on Feb. 25

2021-02-25 21:41:00 by Philip van Doorn from MarketWatch

DEEP DIVE Rising long-term interest rates sparked by a fear of inflation sent technology stocks tumbling Thursday. The Nasdaq Composite Index (COMP) fell 3.5%, while the even more technology-weighted Nasdaq-100 Index (NDX) which is tracked by Invesco QQQ Trust (QQQ) dropped 3.


25.

Stock market news live updates: Stocks drop, Nasdaq posts worst session since October as tech rout deepens

2021-02-25 21:03:20 by Emily McCormick from Yahoo Finance

Stocks traded lower, and tech shares sold off, as a rapid rise in Treasury yields spooked equity investors.

All three major indexes fell, and the Nasdaq underperformed with a drop of 3.5% for its worst session since October as tech stocks renewed their declines. The S&P 500 sank by 2.5%. The Dow traded lower by more than 1.5%, after the index reached a record closing high a day earlier as cyclical and value stocks maintained their leadership positions.

Meanwhile, shares of GameStop (GME) extended gains after more than doubling on Wednesday, after investors on Reddit appeared to take the news of Chief Financial Officer Jim Bell's resignation as a signal of a possible positive turnaround for the company. Shares of AMC (AMC), another speculative darling of vocal retail traders on Reddit, also rallied.

U.S. Treasury yields rose to fresh one-year highs. The yield on the 10-year U.S. Treasury note broke above 1.45% for the first time since February 2020 on Thursday, adding to recent advances.

Federal Reserve Chair Jerome Powell has tried to temper market participants' increasing fears over higher inflation and rates during his semiannual monetary policy testimony before Congress earlier this week. He reaffirmed his view that upward pressure on prices in the coming months would be transitory, and that the U.S. economy still required policy support to emerge from the coronavirus pandemic.

“It seems pretty clear to us that the move in rates has been driven by growing optimism about economic growth, and rates are finally ‘catching up’ to the bullish growth outlook in equities. So equity investors should not be overly concerned,” UBS strategist David Lefkowitz wrote in a note.

“But can rates rise too much before it begins to become a headwind for stocks? In theory, yes, but typically only if the rise in rates begins to choke off economic growth, perhaps because the Federal Reserve is worried about inflation,” he added. “With the pandemic winding down later this year, massive pent-up consumer demand (close to USD 2 trillion of excess savings by consumers), more fiscal stimulus on the way, and the Fed keeping the pedal to the metal, it's hard to see the recent rise in rates having a material drag on economic growth.”

4:02 p.m. ET: Stocks slide, Nasdaq drops 3.5% for worst day since October as tech rout deepens

Here were the main moves in markets as of 4:02 p.m. ET:

  • S&P 500 (^GSPC): -96.18 (-2.45%) to 3,829.25

  • Dow (^DJI): -561.36 (-1.76%) to 31,400.50

  • Nasdaq (^IXIC): -478.54 (-3.52%) to 13,119.43

  • Crude (CL=F): +$0.17 (+0.27%) to $63.39 a barrel

  • Gold (GC=F): -$26.60 (-1.48%) to $1,771.30 per ounce

  • 10-year Treasury (^TNX): +12.9 bps to yield 1.5180%

12:09 p.m. ET: Stocks extend declines, Nasdaq drops 2%

The three major indexes added to losses Thursday afternoon. The S&P 500 dropped 1.4% as the information technology, consumer discretionary and communication services sectors declined sharply. Consumer staples, healthcare and utilities stocks outperformed, though the sectors were still in slightly negative territory.

The Nasdaq dropped more than 2% for the second time this week, as selling pressure in tech and growth stocks picked up steam. The Dow dropped more than 300 points, or 1%, as shares of Boeing and Intel led to the downside.

10:00 a.m. ET: Pending home sales unexpectedly declined in January

Pending home sales unexpectedly fell on a month-over-month basis in January, dropping by 2.8%, the National Association of Realtors reported on Thursday. This followed an upwardly revised monthly increase of 0.5% in December, whereas a decline of 0.3% was reported previously.

Despite the sequential decline in pending home sales at the start of the year, sales were still up strongly on a year-over-year basis. Pending home sales remained higher by 8.2% in January over the same month in 2020.

9:33 a.m. ET: Stocks open mixed

Here were the main moves in markets as of 9:33 a.m. ET:

  • S&P 500 (^GSPC): -8.67 points (-0.22%) to 3,916.76

  • Dow (^DJI): +14.8 (+0.05%) to 31,976.66

  • Nasdaq (^IXIC): -50.67 (-0.37%) to 13,556.05

  • Crude (CL=F): -$0.38 (-0.6%) to $62.84 a barrel

  • Gold (GC=F): -$18.30 (-1.02%) to $1,779.60 per ounce

  • 10-year Treasury (^TNX): +5 bps to yield 1.439%

8:45 a.m. ET: Durable goods orders surged much more than expected in January, led by rebound in aircraft demand

Orders for U.S. durable goods, or products meant to last three years or longer, increased far more than expected in January, led by a rebound in demand for aircraft after a 2020 slump.

Durable goods orders rose 3.4% in January over December, following an upwardly revised 1.2% increase during the previous month, the Commerce Department said. Consensus economists were looking for durable goods orders to rise by 1.1%, according to Bloomberg consensus data.

New orders for non-defense aircraft and parts increased by a stunning 389.9% in January over December, contributing much of the gain. Excluding transportation orders, durable goods orders rose by 1.4%, for a pace still double the 0.7% consensus estimate.

Non-defense capital goods orders excluding aircraft did slow more than anticipated in January, however. This proxy for business capital expenditures rose by 0.5% during the month, missing estimates for a 0.8% rise.

8:43 a.m. ET: Jobless claims fall more than expected, dropping below 800,000 for the first time in seven weeks

Weekly unemployment claims fell far more than expected last week, as the labor market recovery took a stride forward even as harsh winter weather compounded with the coronavirus pandemic over the past several weeks. New jobless claims totaled 730,000, or better than the 825,000 expected. This was also an improvement from the prior week's downwardly revised 841,000.

Continuing jobless claims fell to 4.419 million, down from the upwardly revised 4.520 million from the prior week.

7:17 a.m. ET Thursday: Stocks point to a slightly lower open

Here's where markets were trading Thursday morning before the opening bell:

  • S&P 500 (^GSPC): -13 points (-0.33%) to 3,909.50

  • Dow (^DJI): -3 points (-0.01%) to 31,913.00

  • Nasdaq (^IXIC): -135.5 points (-1.02%) to 13,166.50

  • Crude (CL=F): +$0.15 (+0.24%) to $63.37 a barrel

  • Gold (GC=F): -$13.10 (-0.73%) to $1,784.80 per ounce

  • 10-year Treasury (^TNX): +5.9 bps to yield 1.448%

6:01 p.m. ET Wednesday: Stocks open flat after Dow reaches record high

Here's where markets were trading as the overnight session began:

  • S&P 500 futures (ES=F): 3,922.5, unchanged

  • Dow futures (YM=F): 31,934.00, up 18 points or 0.06%

  • Nasdaq futures (NQ=F): 13,292.5, down 9.5 points or 0.07%

People walk past the New York Stock Exchange (NYSE) at Wall Street on February 17, 2021 in New York City. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
People walk past the New York Stock Exchange (NYSE) at Wall Street on February 17, 2021 in New York City. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
ANGELA WEISS via Getty Images

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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26.

'I don't' miss the glamour of Hollywood: Legendary Entertainment founder

2021-02-25 11:00:00 by Yahoo Finance Video

Thomas Tull, founder of Legendary Entertainment, joins 'Influencers with Andy Serwer' to discuss his experience in the movie business and the future of big budget films.


27.

This stock fund may be for you if you want to sleep well at night and still make money

2021-02-24 17:55:00 by Philip van Doorn from MarketWatch

Jordan Kahn of ACM Funds explains his long/short strategy that has outperformed the S&P 500 through the COVID-19 pandemic.


28.

Stock market news live updates: Dow rallies to reach record high as tech stocks recover losses

2021-02-24 16:12:07 by Emily McCormick from Yahoo Finance

 

Stocks rose on Wednesday, with each of the three major indexes climbing as tech shares shook off some recent losses.

[Click here to read what's moving markets heading into Thursday, Feb. 25]

The Dow added about 1.4%, or 425 points, led by a jump in shares of Boeing. The S&P 500 gained 1.1%, while the Nasdaq gained just under 1%.

A rotation into cyclical and value stocks and away from some of the high growth names that led markets higher last year has picked up steam over the past week. The energy, financials, materials and industrial sectors have outperformed strongly over the last five trading days, while the information technology and consumer discretionary sectors lagged.

"This month has actually [been] the largest outperformance of value versus growth in the last 20 years,” Sam Hendel, Levin Easterly Partners, told Yahoo Finance. “We’re sort of seeing a really nice sweet spot for value stocks that we think have been left behind … Growth’s had this huge run, and rates are so low that there aren’t that many places to find yield. So we still think value has a lot of legs."

At the same time, concerns over inflation and rising Treasury yields have also weighed on stocks across the board this week, with higher prices and increased borrowing costs for companies seen as an emerging threat. The benchmark 10-year Treasury yield briefly rose above 1.4% Wednesday morning, continuing its march higher.

Federal Reserve Chair Jerome Powell, however, tried to assuage market participants' fears during his semiannual monetary policy testimony before Congress on Tuesday and Wednesday, saying that Treasury yields' march higher was "a statement of confidence on the part of markets that we’ll have a robust and ultimately complete recovery" and reaffirming that he believed any inflation in the coming months will prove transitory.

"I think there was a bit of a scare in markets last week because we were starting to see more of the move coming in real yields, and if that were to go too far then I think it could potentially cause some issues for risk assets," UBS economist Seth Carpenter told Yahoo Finance. "And I think the real concern is that if it goes so far that it starts to impair the recovery, then it becomes a problem. So far I think we’re in good shape, but it’s something absolutely to watch.”

4:03 p.m. ET: Dow adds 425 points, or 1.4%, to reach a record high as tech shares rebound

Here were the main moves in markets as of 4:03 p.m. ET:

  • S&P 500 (^GSPC): +44.03 (+1.13%) to 3,925.40

  • Dow (^DJI): +424.78 (+1.35%) to 31,962.13

  • Nasdaq (^IXIC): +132.77 (+0.99%) to 13,597.97

  • Crude (CL=F): +$1.56 (+2.53%) to $63.23 a barrel

  • Gold (GC=F): -$5.50 (-0.30%) to $1,800.40 per ounce

  • 10-year Treasury (^TNX): +2.7 bps to yield 1.3890%

11:08 a.m. ET: S&P 500, Dow turn positive while Nasdaq holds lower

Here's where markets were trading Wednesday mid-morning:

  • S&P 500 (^GSPC): +12.12 (+0.31%) to 3,893.49

  • Dow (^DJI): +174.95 (+0.55%) to 31,712.30

  • Nasdaq (^IXIC): -15.14 (-0.11%) to 13,450.06

  • Crude (CL=F): +$1.44 (+2.34%) to $63.11 a barrel

  • Gold (GC=F): -$14.00 (-0.78%) to $1,791.90 per ounce

  • 10-year Treasury (^TNX): +3 bps to yield 1.39%

10:05 a.m. ET: New home sales rise more than expected in January as housing market surge extends further

U.S. new home sales jumped by 4.3% in January over December, the Commerce Department reported Wednesday morning, far exceeding expectations as a jump in housing market activity last year extended into the beginning of the new year. December's month-over-month increase was also sharply upwardly revised to 5.5%, from the 1.6% rise previously reported.

The January jump brought new home sales to a seasonally adjusted annual rate of 923,000, the highest level since October. The increase was led by a 12.6% jump in sales in the Midwest, followed by a wide margin by a 6.8% rise in sales in the West. Only the Northeast saw a drop of new home sales during the month, posting a decline of 13.9%.

9:31 a.m. ET: Stocks open lower

Here's where markets were trading after the opening bell:

  • S&P 500 (^GSPC): -7.58 (-0.2%) to 3,875.68

  • Dow (^DJI): -17.17 (-0.05%) to 31,520.18

  • Nasdaq (^IXIC): -70.19 (-0.52%) to 13,404.60

  • Crude (CL=F): +$0.79 (+1.28%) to $62.46 a barrel

  • Gold (GC=F): -$17.00 (-0.94%) to $1,788.90 per ounce

  • 10-year Treasury (^TNX): +6.6 bps to yield 1.43%

9:02 a.m. ET: FDA staff deem Johnson & Johnson's single-shot COVID-19 vaccine safe and effective, paving the way for formal authorization

U.S. Food and Drug Administration staff said in new documents released Wednesday that Johnson & Johnson's (JNJ) single-shot COVID-19 vaccine appeared safe and effective in trials, reaffirming data the company announced late last month. The drugmaker had said at the time that its vaccine was 66% effective in protecting against COVID-19 and a number of variants, based on a study involving nearly 44,000 people globally. In the U.S., efficacy against COVID-19 was found to be 72%.

The new documents provide encouraging signs that a third COVID-19 vaccine in the U.S. may soon be approved. The FDA's advisory panel is set to meet February 26, soon after which a definitive authorization could be granted to the vaccine.

Shares of Johnson & Johnson, a Dow component, rose 1.2% in early trading following the news.

7:29 a.m. ET: Lowe's shares jump 2% in early trading after 4Q results top estimates amid still-strong home improvement demand

Shares of Lowe's (LOW) rose more than 2% Wednesday morning after posting fourth-quarter results that handily exceeding expectations, posting more than $20 billion in quarterly revenue as consumer flocked to the retailer for home improvement projects while sheltering in place.

Adjusted earnings of $1.33 per share on net sales of $20.31 billion were easily above estimates for $1.21 per share on sales of $19.41 billion. Comparable same-store sales, a closely watched metric for retailers, rocketed higher by 28.6%, accelerating sharply over last year's 2.6% growth rate. Lowe's outpaced larger rival Home Depot on U.S. comparable sales growth, with Home Depot's comps rising 25% during the fourth quarter.

Lowe's also declined to offer specific guidance for this year, but said it saw "continued sales momentum" in February.

7:17 a.m. ET Wednesday: Stocks point to a slightly higher open

Here's where markets were trading Wednesday morning before the opening bell:

  • S&P 500 (^GSPC): +6.25 (+0.16%) to 3,884.25

  • Dow (^DJI): +34.00 (+0.11%) to 31,526.00

  • Nasdaq (^IXIC): +13 (+0.1%) to 13,205.00

  • Crude (CL=F): +$1.09 (+0.67%) to $62.34 a barrel

  • Gold (GC=F): +$2.30 (+0.13%) to $1,808.20 per ounce

  • 10-year Treasury (^TNX): +0.3 bps to yield 1.367%

6:01 p.m. ET Tuesday: Stocks open flat after choppy session

Here's where markets were trading as the overnight session began:

  • S&P 500 futures (ES=F): 3,878.50, up 0.5 points or 0.01%

  • Dow futures (YM=F): 31,497.00, up 5 points or 0.02%

  • Nasdaq futures (NQ=F): 13,183.75, down 8.25 points or 0.06%

Morning commuters walk past the New York Stock Exchange October 28, 2008. U.S. stocks rose on Tuesday as investors followed Asian and European markets higher, buying shares beaten down in recent sessions and putting aside concerns about a plunge in consumer confidence.     REUTERS/Brendan McDermid (UNITED STATES)
Morning commuters walk past the New York Stock Exchange October 28, 2008. U.S. stocks rose on Tuesday as investors followed Asian and European markets higher, buying shares beaten down in recent sessions and putting aside concerns about a plunge in consumer confidence. REUTERS/Brendan McDermid (UNITED STATES)
Brendan McDermid / reuters

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

Read more from Emily:


29.

Top Wall St strategist boosts his 2021 S&P 500 target for a second time

2021-02-23 14:35:52 by Emily McCormick from Yahoo Finance

At least one Wall Street strategist is getting even more bullish on stocks this year.

On Tuesday, Credit Suisse strategist Jonathan Golub upwardly revised his S&P 500 price target for the second time in two months. This time, he noted that stronger-than-expected corporate profits and upbeat reopening prospects warranted a more optimistic outlook on equities.

The firm's new year-end S&P 500 price target of 4,300 suggests upside of 10.9% from current levels. In January, Credit Suisse saw the S&P 500 ending 2021 at 4,200, and last year expected the index to rise to 4,050.

Golub now expects aggregate S&P 500 earnings per share to grow to $185 and 2021 and $210 in 2022, up from the $175 and $200, respectively, he estimated previously. Companies already entered 2021 with more profit-making momentum than expected, with fourth-quarter EPS topping estimates by 17% and unexpectedly growing on a year-over-year basis, Golub said.

And as vaccines enable the economy to open further, companies should be able to grow results even more, offering further catalysts for their stock prices.

"With the economy reopening, stimulus abundant, and Fed policy uber-accommodative, it is no surprise that 2021 GDP is expected to run hotter than at any time in the past 35 years," Golub said.

The consensus forecast among major Wall Street banks is for GDP to grow by 6.1% in 2021, Golub added. This would mark a sharp rebound from 2020's COVID-induced 3.5% contraction — the worst since 1946.

"Accelerating GDP should result in higher revenues (every 1% in GDP is a 2.5-3% change in sales), and an even greater gain in EPS given operating leverage," Golub added. "Additionally, rising rates — a benefit to Financials — and copper and oil prices — a boon for Industrials, Energy, and Materials — further augment this favorable backdrop."

NEW YORK, NY - SEPTEMBER 28: A view of the bonze Charging Bull on Wall Street stands at a lower Broadway park at Bowling Green September 28, 2020 in the financial district of New York City. (Photo by Robert Nickelsberg/Getty Images)
NEW YORK, NY - SEPTEMBER 28: A view of the bonze Charging Bull on Wall Street stands at a lower Broadway park at Bowling Green September 28, 2020 in the financial district of New York City. (Photo by Robert Nickelsberg/Getty Images)
Robert Nickelsberg via Getty Images

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

Read more from Emily:


30.

2 timeless lessons for investors from the past year

2021-02-22 11:20:11 by Sam Ro from Yahoo Finance

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Monday, February 22, 2021

Things can go badly fast, but the market will look forward

A year ago, the S&P 500 (^GSPC) began its sharp descent from its then record high as the coronavirus started to get seriously priced into the stock market. From February 19 to March 23, the S&P went on to crash 34% from a closing high of 3,386 to a closing low of 2,237.

On Friday, the S&P closed at 3,906.

From that, investors can learn at least two very important lessons.

The first lesson: things can go badly suddenly and swiftly. It goes without saying, but it's worth repeating. Scary stock market sell-offs happen all the time.

Check out the chart below from JPMorgan Asset Management's Guide to Markets. Morning Brief readers will recognize it as we reference it quite a bit. It shows that the S&P 500 sees sharp intra-year drops almost every year, averaging a 14.3% drop since 1980.

Big stock market drawdowns happen all the time. (JPMorgan Asset Management)
Big stock market drawdowns happen all the time. (JPMorgan Asset Management)
Yahoo Finance

These big sell-offs happen for any number of reasons. One unfortunate reason is unforeseen risks. Investors are constantly pricing in the various visible risks the market is facing. But unforeseen risks are generally considered unlikely and won't be priced into the markets at all. That is, until they happen.

Take, for example, the coronavirus pandemic. The negative impact to the economy clearly wasn't priced in on February 19. But it sure was priced in at least somewhat, if not too much, by March 23. During that month, economists were tripping over each other as they cut their GDP forecasts like there was no bottom in sight.

Now, there's lots to be said about what various types of investors should do when the sell-offs come. Ultimately, the secret to making better investments moves when markets are in turmoil is to already have a plan.

The second lesson: the market is forward looking. Investors don't invest in a business because of the money it is or isn't making right now. Investors invest because of all the money that's expected to be made in all the years down the road.

This largely explains why the stock market and the economy appear to decouple. The truth is, it's not so much that they decouple. Rather, they just reflect different things.

"While it’s difficult to pin down a date when we can expect our lives to completely return to normal, the stock market is already pricing in the normalization of daily life, even if that remains uncertain," LPL Financial analysts said on Friday. "Economic conditions around the world have been improving relative to how they were at the beginning of the pandemic. While pockets of weakness remain, the market is more concerned with where the economic conditions will be, not where they are currently." (Emphasis added.)

It's for this reason that stocks rally when things are terrible. It's for this reason why stocks bottom long before the economic data does.

None of this is intended to discount the tragedy of the coronavirus pandemic and the many other horrifying events that unfortunately riddle history.

Rather, it's a testament to human resilience, which is an incredibly bullish force investors can't afford to ignore as they think about where the market is headed in the years to come. A year after economists were warning of a "deep plunge" in activity, those same economists are now saying to "fasten your seatbelts" as COVID-19 cases drop and the economy surprises to the upside.

"It’s our jobs as investors to focus on our long-term goals,” LPL Financial Chief Market Strategist Ryan Detrick said. “Drawdowns and bear markets are part of the path to get there."

By Sam Ro, managing editor. Follow him at @SamRo

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31.

'Fasten your seatbelts' — The case for a roaring economic recovery

2021-02-19 11:00:49 by Myles Udland from Yahoo Finance

A version of this article first appeared in Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Friday, February 19, 2021

A huge economic reversal from 2009

The U.S. economy is in a reasonably good place right now.

Consumer spending is robust and activity in the service and manufacturing sectors is increasing at a faster rate. The labor market stabilized in January, though as Thursday's report on initial jobless claims showed there is still considerable pressure for workers.

And with Congress having already passed a few trillion dollars worth of fiscal stimulus and up to $1.9 trillion in additional aid making its way into the economy over the months ahead, an improving trajectory seems sustainable for the U.S. economy. But the overall arc of this economic recovery is likely to look even better when compared to the sluggish decade of growth we saw after the financial crisis.

"We think most forecasters are not looking at the whole story for the last recovery," Ethan Harris, global economist at Bank of America Global Research, said in a note published Thursday. "In a number of ways today looks entirely different from 2009."

For Harris, this difference comes down to four core features:

  • The stimulus [in 2009] was late, small and faded too fast. Today's stimulus has been timely, huge and very persistent.

  • In a COVID-19 world, much of the stimulus effect is deferred until the economy reopens.

  • The COVID-19 crisis should leave much smaller economic scars than the biggest banking and real estate crisis in modern history.

  • Household balance sheets were deeply damaged in the last cycle; they are in great shape (in aggregate) today.

In the years ahead, lots will be made of the output gap — that is, the difference between present GDP growth and pre-crisis trend growth — and the speed with which this does or does not close. But Harris looks a bit more closely at the labor market. And specifically how quickly the gap between peak crisis-era unemployment might close in the wake of the pandemic-related recession.

And the short of it is that with additional stimulus, additional consumer spending power, and a corporate sector that isn't dealing with the kinds of aftershocks we saw in the beginning of the last decade, a pre-pandemic labor market could return within a year or two.

"Putting it all together, we look for a much faster return to full employment," Harris writes. "According to CBO estimates the economy did not reach full employment in the last cycle until 2017, 31 quarters into the recovery. This time we expect full employment by 3Q 2022 or 9 quarters into the recovery. Fasten your seatbelts."

Bank of America expects that unemployment could be back to pre-pandemic levels within two years, a stark contrast to the nearly 8 years it took for the labor market to recover after the financial crisis. (Source: Bank of America Global Research)
Bank of America expects that unemployment could be back to pre-pandemic levels within two years, a stark contrast to the nearly 8 years it took for the labor market to recover after the financial crisis. (Source: Bank of America Global Research)

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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Find live stock market quotes and the latest business and finance news

For tutorials and information on investing and trading stocks, check out Cashay


32.

GameStop Falls 91% From Its 2021 Peak As Dow Jones Cuts Losses; These Growth Stocks Break Out

2021-02-18 20:45:30 by DAVID SAITO-CHUNG from Investor's Business Daily

GameStop is still up 127% since Jan. 1. Meanwhile, Wells Fargo held firm after Wednesday's notable breakout.


33.

ROKU (ROKU) Option Traders Wary

2021-02-18 18:24:58 by Investopedia

As price action for Roku (ROKU) doubles in three months, traders protect from the probability of a drop.


34.

Applied Materials (AMAT) Option Traders Optimistic

2021-02-18 17:57:40 by Investopedia

As price action for Applied Materials (AMAT) rises 60% in three months, traders discount the probability of a drop


35.

Bill Gates: Facebook banning Trump 'forever' would not be 'that good'

2021-02-18 15:01:10 by Yahoo Finance Video

Bill Gates, author of ‘How to Avoid a Climate Disaster’, joins Yahoo Finance's Andy Serwer to discuss Facebook's implementation of an 'oversight board' and the company's decision to ban President Trump.


36.

The U.S. economy continues to surprise

2021-02-18 11:01:14 by Myles Udland from Yahoo Finance

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Thursday, February 18, 2021

Retail sales go boom in January

For months now, the U.S. economy has performed better than expected.

Or rather, has held in better than feared by economists and policymakers alike.

In October, we highlighted data coming in better than expected after the CARES Act lapsed in July and no additional fiscal support had come in to fill the hole. In December, we noted that pent-up demand from an inability to spend on many services and experiences coupled with fiscal support could supercharge growth this year. And earlier this month, we flagged economic surveys and employment data that pointed to continued improvements in the economic outlook.

And then on Wednesday morning, retail sales data spelled out how additional spending power to consumers coupled with continued economic resilience will serve as a potent accelerator for economic growth in 2021. And it shows why folks like Jan Hatzius at Goldman Sachs have been so aggressive in raising their economic forecasts for this year and next.

Retail sales for the month of January rose 5.3%, far exceeding Wall Street’s consensus expectations for growth of 1.1%. Gains were broad-based across categories, with every category recording a positive month-on-month comp and notable gains coming from surprising areas like department stores, where sales rose 23.5% in January. Bespoke Investment Group noted Wednesday that this marked just the fifth month since 1992 that all 13 sectors within the report recorded month-on-month gains.

Michael Pearce, senior U.S. economist at Capital Economics, said in a note Wednesday that this report “underlines how quickly re-openings and the $600 stimulus [checks] have fed through to stronger spending. The faster than expected fiscal boost means we now forecast first-quarter GDP growth to be 7.8% [annualized], up from our previous forecast of 6.0%.”

Pearce added that "outsized gains in big ticket discretionary items suggests that the $900 [billion] fiscal stimulus, passed late last year, is working as intended — with most Americans receiving $600 per person stimulus cheques early in the month, while monthly unemployment insurance payments were increased."

So while the overall size of the individual checks in the most recent round of stimulus were smaller than what was disbursed in April, spending has been quicker to follow from this distribution.

In a report to clients published last month, Michelle Meyer and the economics team at Bank of America included the following chart, which showed the speed with which the latest round of stimulus checks were feeding into the economy.

Consumers have been spending their stimulus checks more aggressively at the start of the year, something we clearly saw feed into a stellar retail sales report on Wednesday. (Source: Bank of America Global Research)
Consumers have been spending their stimulus checks more aggressively at the start of the year, something we clearly saw feed into a stellar retail sales report on Wednesday. (Source: Bank of America Global Research)

All of which suggests this kind of data may be just a preview of what’s in store over the balance of the year if anything like the $1.9 trillion fiscal plan currently being discussed by lawmakers is indeed passed.

And outlines why upside risks are still a factor in the market story right now.

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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37.

Best (and Only) Nasdaq ETF for Q2 2021

2021-02-17 11:51:40 by Investopedia

Investors who want to own stocks in the technology sector may decide to buy exchange traded funds (ETFs) that track the Nasdaq. When investors refer to the Nasdaq, they typically refer to the tech-heavy Nasdaq Composite Index, which is comprised of more than 2,500 companies. The Nasdaq 100 index is another way for investors to effectively track the broader Nasdaq Composite.


38.

COVID-19 cases are dropping like a rock

2021-02-17 10:59:58 by Myles Udland from Yahoo Finance

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Wednesday, February 17, 2021

A version of this article first appeared in the Morning Brief.

As markets rally, the pandemic quietly eases

The stock market continued its rally on Tuesday.

As Sam Ro noted in Tuesday's Morning Brief, the fundamental backdrop for stocks continues to improve as fourth quarter earnings have rolled in. The market's performance in 2021 reflects this strength.

But amid a flurry of interest in markets as a result of Bitcoin's rally and the wild swings in GameStop (GME) that captivated the public last month, what has been somewhat overlooked by investors is the improvement we've seen in the pandemic.

And specifically in the declining number of new COVID-19 cases and COVID-related hospitalizations over the last few weeks.

On Monday, the number of new COVID cases recorded was the lowest since mid-October while recorded COVID-related deaths were the lowest since Nov. 30. Hospitalizations are down about 45% from their January peak.

And while winter weather across the country will disrupt this week's vaccination plans and potentially depress testing totals, the overall trajectory of the virus in the U.S. has been clear over the last few weeks.

Readers will know that for months here at The Morning Brief we've emphasized the importance of rates of change and how investors look for things that are getting better or worse, not just things that are absolutely good or bad.

And while the pandemic remains a very bad situation, it is getting better. And quickly.

Daily new COVID infections continue to decline across the country. (Source: Goldman Sachs)
Daily new COVID infections continue to decline across the country. (Source: Goldman Sachs)

Of course, this does not mean the pandemic is over. Or even close to it. The more contagious B.1.1.7 variant is spreading through the population with confirmed cases in 40 states. Dr. Anthony Fauci also pushed back his expectations of when most Americans will have access to a COVID-19 vaccine by about six weeks on Tuesday.

This improvement in the data was to some extent expected as the impact from the holidays wore off and the distribution of vaccines continued. If we want to argue about what the market was "pricing in" on the COVID front, a springtime improvement and a mostly normal summer in the U.S. seemed like the base case.

On the other hand, as Bloomberg columnist Conor Sen noted earlier this week, the model from at least one Wall Street firm suggested a peak in cases wouldn't peak until next month. And while a resurgence of the virus cannot be ruled out, data suggests that nearly 40% of the population has either been infected or inoculated against COVID-19.

And so as we sit here today, we can say with confidence the pandemic situation in the U.S. is getting better. And for investors it is this direction which matters most.

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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39.

Goldman Sachs' 'Marcus Invest' bets against the GameStop trend

2021-02-16 21:58:11 by Ethan Wolff-Mann from Yahoo Finance

Goldman Sachs announced a new product called Marcus Invest on Tuesday, a low-cost digital investment platform much like the robo-advisors that have emerged in the last 10 years. The product joins the bank’s other Marcus consumer-facing products, which include bank accounts and personal loans.

At first glance, the new product seems to piggyback on the unprecedented interest in stocks following the l’affaire GameStop, in which the power of social media helped drive up a sleepy stock from the teens to almost $400 before it fell back down again.

But there’s one big difference that represents a big gamble for the firm: You can’t buy individual stocks through Marcus Invest.

Last year was the biggest ever for people signing up for new brokerage accounts thanks to free trading on platforms like Robinhood. But 2021 might eclipse 2020 in terms of new investors coming into the market: more people have googled “how to buy stocks” in the last week of January than ever before.

Marcus (“by Goldman”) and its new product may look as if it’s jumping on the bandwagon to try to woo these new investors, but the inability to trade stocks with it means it’s a completely different type of offering than Robinhood and its more established competitors like Schwab, TD Ameritrade, Interactive Brokers, and the like. Instead, Goldman is going with a more robo-advisor and automated type of investing, letting allocation of a managed basket of asset classes represented by ETFs be the differentiating factor rather than trying to pick winning stocks.

The managed basket of index funds and ETFs is already becoming “best practice” for a lot in the financial industry: you diversify and invest with a handful of funds that provide exposure to U.S. large-cap stocks, emerging markets, foreign stocks, corporate bonds, or whatever you need. It does not involve picking individual stocks.

Investing is a problem that has been ‘solved’

This has grown into accepted conventional investing wisdom in the money management world. Scores of wealth management firms focus on allocation and use ETFs and index funds as their primary tools, rather than stock picking.

“People are historically not great stock pickers,” Ritholtz Wealth Management’s Barry Ritholtz told Yahoo Finance. “The data overwhelmingly shows that most people do not add any value in their stock selection.” Ritholtz’s firm is a strong advocate of asset class investing. If you have the compulsion to defy the odds and buy stocks, just keep it a small percentage of your overall portfolio and be okay losing it all.

HONG KONG, CHINA - 2018/12/28:  In this photo illustration, the Goldman Sachs logo is seen displayed on an Android smartphone over stock chart. (Photo Illustration by Daniel Fung/SOPA Images/LightRocket via Getty Images)
Goldman Sachs logo is seen displayed on an Android smartphone over stock chart. (Photo Illustration by Daniel Fung/SOPA Images/LightRocket via Getty Images)
SOPA Images via Getty Images

“If you want to set up a side account with 10% of your money, you can buy all the Tesla and bitcoin,” Ritholtz said. “Go buy yourself a boat if it works out. But if you’re going to be saving regularly for the long haul, I question the ability for the average investor to first identify which stocks, second determine how long to hold them.”

These days, investing in stocks sort of exists on two ends of a wealth spectrum. On the one side you have the ultra-rich hedge fund types who have teams of researchers to help them get “edge” on the market. On the other side, you have people who are new to the market and getting their feet wet as beginners. The middle is the land of index funds and sensible, boring products that allow people to save for retirement.

And according to Ritholtz, boring is good.

“Good investing is not supposed to be exciting,” he said. “Investing is a problem that has been solved. What hasn’t been solved is the human propensity to get into trouble. To get FOMO.”

That doesn’t sound very glamorous — and Goldman might have made a bigger splash by buying Robinhood. But instead it decided to create something in line with the personal finance expert orthodoxy as well as many of their own employees.

Products like this — or doing it DIY with your own basket of a few ETFs — is how a lot of people in the Goldman world – people who work on Wall Street – invest.

Though plenty of people there likely think like Ritholtz and spend their time doing other things than researching stocks to buy, for compliance reasons, many of them simply own a simple fund-based portfolio. With Marcus, therefore, you may be literally investing like people at Goldman.

-

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.


40.

Twilio (TWLO) Option Traders Optimistic

2021-02-16 17:56:46 by Investopedia

Optimistic traders have bid up the share prices for Twilio Inc. (TWLO) ahead of its quarterly earnings announcement. There's no way to accurately predict the direction a stock will move after an earnings announcement. Option trading represents the activities of investors who want to protect their positions or speculators who want to profit from correctly forecasting unexpected moves in an underlying stock or index.


41.

Shopify (SHOP) Option Traders Optimistic, but ...

2021-02-16 17:22:36 by Investopedia

Optimistic traders have bid up the share prices for Shopify Inc. (SHOP) ahead of its quarterly earnings announcement. There's no way to accurately predict the direction a stock will move after the announcement. Option trading represents the activities of investors who want to protect their positions or speculators who want to profit from correctly forecasting unexpected moves in an underlying stock or index.


42.

You don't have to trade GameStop, SPACs, or Bitcoin for big returns

2021-02-16 11:10:19 by Sam Ro from Yahoo Finance

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Tuesday, February 16, 2021

The stock market continues to set new record highs

From GameStop (GME) to Bitcoin (BTC-USD) to SPACs and everything in between, it's hard to keep track of all the wild market moving headlines that have crossed in 2021 so far.

But amid this backdrop, there's another massive story: the stock market continues to climb to new highs.

On Friday, the S&P 500 (^GSPC) closed at a record high of 3,934. Year-to-date, that's an impressive 4.7% gain. The market has already blown past the year-end targets of a handful of Wall Street strategists, and we're only halfway through February.

This comes as earnings smash expectations and the prospect for further earnings growth is robust.

"While investors continue to debate how soon business activity will return to 'normal,' the 4Q 2020 earnings season surprisingly revealed that S&P 500 profits have already surpassed their pre-pandemic level," Goldman Sachs' David Kostin wrote on Friday. "65% of S&P 500 firms reported EPS more than a standard deviation above consensus, ranking just behind 3Q 2020 as the best quarter in at least 23 years."

Kostin also raised his estimate for S&P 500 2021 earnings per share (EPS) to $181. This marks his second revision since unveiling his 2021 targets just three months ago. And he isn't alone. Kostin notes consensus estimates for S&P 500 EPS in 2021 "have jumped by $5 in the last few weeks as strong 4Q results have led to positive earnings revisions in 10 of 11 sectors."

And he thinks the good news could keep coming.

"With the market already expecting a strong rebound, what is the next upside catalyst for US equities? One possible answer is fiscal stimulus," Kostin said. "[Last] week our economists lifted their expectations for near-term fiscal stimulus to $1.5 trillion. They also revised their forecast for 2021 US real GDP growth to 6.8%, including an 11% annualized rate in 2Q."

Though he notes some parts of the stock market will fare better than others from stimulus.

"If every dollar of the estimated $1.5 trillion package were added to corporate revenues, S&P 500 earnings would rise by about 4%, but this likely overstates the actual eventual impact," Kostin said. "The industry composition of the S&P 500 means index EPS gains will be less than the stimulus-enhanced economic recovery. In contrast, the economic sensitivity of small-caps helps explain why the Russell 2000 has risen by 16% YTD."

Nevertheless, earnings seem to be telling us we're early cycle.

Sure, GameStop, Bitcoin and SPACs are all assets making traders mountains of money. But while some may be desperate for better returns, being broadly diversified (e.g. investing in an S&P 500 index fund) continues to be a winning strategy.

By Sam Ro, managing editor. Follow him at @SamRo

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43.

How Long It Takes To Be A Millionaire With Stocks

2021-02-12 18:52:50 by MATT KRANTZ from Investor's Business Daily

Many investors are piling into stocks — including in the S&P 500 — hoping to be millionaires. And while stocks are millionaire makers, the wait varies.


44.

The stock market is a fascinating place right now

2021-02-12 10:48:49 by Myles Udland from Yahoo Finance

Friday, February 12, 2021

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET.  Subscribe

A new abnormal in financial markets.

All week in this space we’ve explored some of the oddities in today’s financial markets.

Valuations are quaint.

Great earnings aren’t being rewarded by investors.

Companies doing poorly are seeing their shares do better than companies doing well.

In these kinds of environments it can be tempting to try and pull together One Big Story that explains why everything that is happening in markets is indeed happening.

But this effort often leads to misguided and sweeping statements that end in blaming the Federal Reserve for manipulating the market or something. And we are not fans of that worldview here at the Morning Brief.

Instead we think it is simply worth acknowledging and accepting as this week winds down that this market is simply different.

Right now, we’ve got a market that moves on memes.

Two weeks ago it was GameStop (GME). Then it was silver. This week the meme has been weed stocks. Next week will bring another.

The influx of retail traders playing in the market is also no longer in doubt. All that’s left to debate are the varying degrees of how much this bid “matters” in the market.

“The retail investor is increasingly becoming the marginal buyer of equities,” said strategists at UBS in a note to clients published earlier this week.

“Even during the peak COVID-19 sell-off, the share of retail volumes jumped. So far in 2021, the retail share of total volumes is 60% higher than it was in 2018.”

Retail's role in the stock market has exploded this year and the role this investor plays in the market can no longer be ignored. (Source: UBS)
Retail's role in the stock market has exploded this year and the role this investor plays in the market can no longer be ignored. (Source: UBS)

And then there’s crypto adoption, and specifically the role Bitcoin (BTC-USD) now plays for corporates. This uptake isn’t accelerating; it is exploding. To guess at an endpoint for the role Bitcoin or other cryptocurrencies play in the global financial system is to likely underestimate the future.

In an interview on Yahoo Finance Live on Thursday, we asked BTIG strategist Julian Emanuel if this is the most interesting market he’s seen in his career. And his answer, in a word, was “Yes.”

But his full answer really helps illustrate how for market veterans like himself, the current environment calls for thinking differently about whatever it is investors had told themselves would always be true in the world of finance.

“So I've been doing this quite a while,” Emanuel said. “I was a proprietary trader in 1999 and 2000. And, frankly, I thought that I had seen it all at that point, but there's no question about the fact that the last year — and in particular the last three or four months — have been absolutely fascinating, and the benefits of living in the same house with a 23-year-old and a 20-year-old who are actively engaged in social media and investing themselves have been incalculable in my ability to understand it.”

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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Editor’s Note: The Morning Brief is observing Presidents Day on Monday, Feb. 15. We’ll be back on Tuesday, Feb. 16.

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45.

Jobless claims: Another 793,000 Americans filed new unemployment claims last week

2021-02-11 13:31:26 by Emily McCormick from Yahoo Finance

New weekly unemployment claims pulled back slightly but held at elevated levels last week, and the prior week’s new claims were upwardly revised as the coronavirus pandemic exerted more pressure on the labor market.

The Department of Labor released its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here were the main results from the report, compared to consensus estimates compiled by Bloomberg:

  • Initial jobless claims, week ended Feb. 6: 793,000 vs. 760,000 expected and a revised 812,000 during the prior week

  • Continuing claims, week ended Jan. 30: 4.545 million vs. 4.420 million expected and a revised 4.690 million during the prior week

New weekly jobless claims fell relative to the prior week’s level, which was upwardly revised to 812,000 from the 779,000 previously reported. This brought new claims for the week ended February 6 to the lowest level in five weeks. And despite last week’s upward revision, the four-week moving average for new claims fell by 33,500 to 823,000.

By state, some of the most populous parts of the country saw encouragingly large drops in unadjusted new jobless claims last week. Florida saw by far the greatest decrease, with unadjusted initial jobless claims dropping by more than 51,000 last week. New York followed by a wide margin, with new claims in the state dropping by nearly 20,000. New claims in Maryland dropped by more than 19,000 as well, and initial claims in Texas fell by more than 13,600. On the other hand, California saw another surge in new claims, with these rising by more than 23,000.

On the whole, new jobless claims have been tracking a decline in COVID-19 cases, with the rate of new cases, hospitalizations and deaths retreating after a holiday spike. Over the past week, an average of about 105,000 cases were reported per day, dropping 36% from the average of two weeks earlier, according to data compiled by the New York Times. And the Biden administration recently boosted the weekly supply of COVID-19 vaccines sent to states by 28% to 11 million, offering hopes that widespread immunity could allow for faster reopenings and rehirings.

“The U.S. is in a much better position than we expected so early in the year and, as a result, pressure on governors to reopen is going to build more quickly,” Ian Shepherdson, Pantheon Macroeconomics chief economist, wrote in a note ahead of Thursday’s report.

In the meantime, however, millions of Americans remain unemployed and reliant on state and federal unemployment benefits for support. The number of initial claims for Pandemic Unemployment Assistance (PUA), which offers jobless benefits for gig and self-employed workers who do not qualify for regular state programs, declined by about 34,000 last week. However, based on the latest data, more than 20.4 million Americans were still claiming benefits of some form, marking an increase of more than 2.5 million from the prior week. That included more than 13 million on either PUA or Pandemic Emergency Unemployment Compensation (PEUC) program, another federal program.

Both the PUA and PEUC are slated to expire in mid-March in the absence of additional action out of Congress. Congressional committees this week have been drafting legislation for another virus-relief package, after both the House of Representatives and Senate voted last week to press ahead with pursuing a package via a legislative process that would not require Republican support. Sen. Ron Wyden (D., Ore.), the chairman of the Senate Finance Committee, told Yahoo Finance earlier this week that it would be “absolutely unacceptable” to not pass another stimulus bill before the March unemployment cliff.

This post is breaking. Check back for updates.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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46.

The worst stocks are doing the best

2021-02-11 11:02:38 by Myles Udland from Yahoo Finance

Thursday, February 11, 2021

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET.  Subscribe

Everything bad is now good, market edition.

The stock market is the meme market now.

From the GameStop (GME) saga to Tesla’s Bitcoin buy (BTC-USD) to Elon’s Dogecoin (DOGE-USD) purchase, it seems like any internet-based humor that is even vaguely financial manages to impact asset prices.

But factoring in how much of a meme a given asset might be is just not part of traditional portfolio management or anything they teach in the CFA program. Yet.

What investment managers do learn, however, is that sometimes in markets everything that seems like it shouldn’t happen does. In other words, there are market moments during which it makes sense to think about what trades might make the least sense. And there you find your winners.

“Imagine for a moment that a portfolio manager describes their investment process as follows: they focus exclusively on companies with deteriorating or questionable business prospects, and lots of debt,” writes Credit Suisse analyst Patrick Palfry in a note to clients published Tuesday.

“They go on to highlight their fondness for companies that make poor use of invested capital, and experience large selloffs during periods of stress. While such a process might sound absurd, it is an excellent depiction of what’s been working since Pfizer’s November 6 vaccine announcement, which shifted investor focus toward the reopening process.”

In their note, Palfry and the team at Credit Suisse run through a series of these measures that define this market wherein investors reward what they call “junk and disappointment.”

Notably, Credit Suisse finds that stocks with high short interest have almost doubled the performance of stocks with low short interest. On the heels of the GameStop episode which saw, for a time, a number of other heavily shorted names become market darlings this performance is perhaps not all that surprising.

What is surprising, however, is that this trend was in place before the GameStop meme became a national news story. As Credit Suisse notes, “this pattern mimics other low quality metrics, and is reasonably unaffected by recent headlines on retail investor activity.”

Heavily-shorted stocks have been outperforming shares that aren't being bet against by investors and been doing so since before the GameStop drama made
Heavily-shorted stocks have been outperforming shares that aren't being bet against by investors and been doing so since before the GameStop drama made "short squeeze" a household term. (Source: Credit Suisse)

Other measures that surface big winners include screening for stocks that have experienced the highest volatility, shares of companies that produce a low return on assets, and stocks with the biggest 52-week drawdown.

And as if this series of negative indicators turning into alpha generators isn’t frustrating enough for investors inclined to focus on fundamentals, it gets worse. Because actual fundamentals haven’t been helpful at all.

“Interestingly, these signals are much stronger than fundamentally-based metrics,” Credit Suisse writes, noting that the average reaction to shares of a company that beat on the top and bottom line is a decline the following day. Morning Brief readers will recall that Sam Ro highlighted the same trend of negative reactions to good earnings on Monday.

And Credit Suisse’s relative frustration at the explicit shunning of fundamentals by investors isn’t unique to them; on Tuesday, we highlighted work from Goldman Sachs on the same subject.

How long these trends last and how they resolve are topics for folks smarter than us.

But identifying what’s been driving markets, why it’s been driving markets, and how the experts have been flummoxed by these dynamics all help explain what’s been a chaotic start to the year in markets.

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

YAHOO FINANCE HIGHLIGHTS

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47.

Stock market news live updates: Stocks erase gains after reaching record highs

2021-02-10 21:05:20 by Emily McCormick from Yahoo Finance

Stocks turned mostly lower Wednesday and the S&P 500 logged a second day of declines.

[Click here to read what’s moving markets heading into Thursday, February 11]

The Dow ended a tick above the flat line while both the S&P 500 and Nasdaq ended lower after rising to reach record highs shortly after market open. However, all three major indexes have performed strongly for February to date, as has the small-cap Russell 2000, which reached its own record high before turning slightly lower.

Companies that reported quarterly results in the last day largely topped expectations, adding to the pile of estimates-topping reports for last quarter.

Lyft’s stock (LYFT) surged more than 8% after the company said it could be profitable as soon as the third quarter this year, or a full quarter ahead of earlier estimates, thanks to rigorous cost-cutting measures. Shares of Twitter (TWTR) jumped 9% after the company’s sales grew more than expected and its profit beat estimates, though it warned that user growth will likely slow in 2021 after a pandemic-era boom.

So far, companies comprising more than three-quarters of the S&P 500’s market capitalization have reported fourth-quarter results. In aggregate, these results have topped expectations by nearly 17%, and 80% of companies beat their own projections, according to an analysis by Credit Suisse’s Jonathan Golub.

But even amid strong earnings and supportive monetary and fiscal policy, some strategists have begun to debate whether the recent leg higher in markets can be sustained in the very near-term as sentiment starts to get frothy.

“We’ve seen a very strong phase of what I’d call fast markets: A strong rally the last six months in risk assets across the board,” Joseph Little, HSBC Global Asset Management global chief strategist, told Yahoo Finance. “And what that means in practical terms for investors is that a lot more is now discounted. And the story around recovery, around faster economic improvements, around the vaccines is now, at this point, well-known to investors and to other market participants. And that poses the question of what could happen to markets next.”

“My suspicion is that we’re at a point now where, as more is discounted, it becomes harder and harder for the news to really support the market further and further. And that creates what I call a hypersensitivity,” he added. “It means markets are rather vulnerable if the news flow becomes a little bit more difficult, if the news flow begins to disappoint. I’d still be positive as we look out over a six month view. But it could mean that after the run that we’ve seen, we’re in line for a phase of maybe a bit more consolidation.”

Others, however, have remained more upbeat.

“It’s clear that there’s a lot of optimism out there, but I would argue that there are good reasons to be optimistic. Keep in mind that just six or eight months ago, there was an expectation that it would take much longer, if at all, to develop a vaccine that protects against COVID-19,” Kristina Hooper, Invesco chief global market strategist, told Yahoo Finance. “The fact that we have effective vaccines, extremely effective vaccines that are now being distributed means that there is a light at the end of this tunnel and it is a bright light, hence a lot of optimism. Especially given we have a very accommodative Fed, and we also have a decent amount of fiscal stimulus and potentially more coming.”

4:03 p.m. ET: Stocks end mixed after reaching record intraday highs; S&P 500 declines for back-to-back sessions

Here were the main moves in markets as of 4:03 p.m. ET:

  • S&P 500 (^GSPC): -1.33 (-0.03%) to 3,909.90

  • Dow (^DJI): +62.57 (+0.20%) to 31,438.40

  • Nasdaq (^IXIC): -35.16 (-0.25%) to 13,972.53

  • Crude (CL=F): +$0.14 (+0.24%) to $58.50 a barrel

  • Gold (GC=F): +$4.10 (+0.22%) to $1,841.60 per ounce

  • 10-year Treasury (^TNX): -2.4 bps to yield 1.1330%

2:17 p.m. ET: Fed Chair Powell commits to keeping monetary policy easy until those hardest-hit by pandemic recover

Federal Reserve Chair Jerome Powell said during a speech Wednesday that the central bank would focus on achieving maximum employment in the economic recovery from the coronavirus pandemic, and as a result, would not tweak monetary policy or lift rates until a broad-based rebound takes place.

“Maximum employment is a broad and inclusive goal. This change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities,” Powell said in prepared remarks Wednesday. “We will not tighten monetary policy solely in response to a strong labor market.”

Powell also reiterated that bolstering the U.S. economy and labor force participation would require both monetary and fiscal stimulus.

“Given the number of people who have lost their jobs and the likelihood that some will struggle to find work in the post-pandemic economy, achieving and sustaining maximum employment will require more than supportive monetary policy,” he said. “It will require a society-wide commitment, with contributions from across government and the private sector.”

12:39 p.m. ET: Stocks hold lower

Here’s where markets were trading Wednesday afternoon:

  • S&P 500 (^GSPC): -10.22 points (-0.26%) to 3,901.01

  • Dow (^DJI): -37.05 points (-0.12%) to 31,338.78

  • Nasdaq (^IXIC): -61.63 points (-0.44%) to 13,946.77

  • Crude (CL=F): +$0.35 (+0.6%) to $58.71 a barrel

  • Gold (GC=F): +$4.10 (+0.22%) to $1,841.60 per ounce

  • 10-year Treasury (^TNX): -2.1 bps to yield 1.136%

11:52 a.m. ET: Analysts get more bullish on Twitter after strong 4Q advertising sales beat, sparking wave of price target revisions

Wall Street firms are getting more bullish on Twitter (TWTR) after the company posted much stronger than expected fourth-quarter sales, in a testament to the broader pick-up in online advertising as well as the success of the company’s efforts to revamp its advertising products. Advertising revenue surged 31% to $1.15 billion during the fourth quarter, accelerating from the 15% ad sales growth in the prior quarter. However, the company did warn its user growth would likely slow this year.

Here’s what some analysts said about Twitter’s results:

  • JPMorgan’s Doug Anmuth (price target raised to $77 from $65): “On the heels of our December upgrade, TWTR remains one of our top 5 stock picks in 2021 (along w/GOOGL, FB, PTON, LYFT) and we believe our bull case is playing out mostly as expected—sharp ad recovery, continued solid engagement, ad product prioritization & innovation, underlying activist efforts helping to improve operational discipline, and the upcoming February 25 Analyst Day as an additional potential catalyst for shares.”

  • Cowen’s John Blackledge (price target raised to $58 from $48): “Twitter is a popular social platform, with rising monetization and operating income, although competitive concerns and valuation drive our Market Perform view. Twitter's user growth has consistently been in the low double digits, and we expect DAUs (EOP) to grow modestly through 2026.”

  • MKM Partners (price target raised to $73 from $60): “We believe TWTR's innovation engine has finally started to crank up new features and products, and believe that there are several low-hanging fruits for Twitter to attract self-service ad dollars.”

9:31 a.m. ET: Stocks open higher

Here’s where markets were trading shortly after market open:

  • S&P 500 (^GSPC): +18.25 points (+0.47%) to 3,923.75

  • Dow (^DJI): +122 points (+0.39%) to 31,400.00

  • Nasdaq (^IXIC): +62 points (+0.45%) to 13,742.25

  • Crude (CL=F): +$0.03 (+0.05%) to $58.39 a barrel

  • Gold (GC=F): +$15.60 (+0.85%) to $1,853.10 per ounce

  • 10-year Treasury (^TNX): -0.3 bps to yield 1.1570%

9:03 a.m. ET: General Motors tops 4Q estimates, but says 2021 earnings will be hit by chip shortages

General Motors (GM) reported fourth-quarter earnings and revenue that topped expectations, though the car-maker said its profit would be hit in the current fiscal year due to chip shortages.

Adjusted earnings were $1.93 per share on revenue of $37.52 billion, with both metrics better than the $1.57 per share on revenue of $35.88 billion expected.

Chip shortages, which have rattled other companies in the auto industry as well, will cut operating profit by between $1.5 billion to $2.0 billion in 2021, GM added, and will also impact production and cash flow. Earlier this month, GM already announced it had extended a halt on production at three North American plants due to chip shortages.

8:40 a.m. ET: Consumer prices increased mildly in January as inflation remained tame

A core measure of consumer price changes increased less than expected in January, according to the Labor Department’s monthly report Wednesday, as inflationary trends remained tame during the ongoing pandemic.

The headline consumer price index (CPI) rose 0.3% in January over December, matching estimates, according to Bloomberg consensus data. However, excluding more volatile food and energy prices, the CPI was unchanged, following an unchanged reading in December as well.

Over last year, CPI excluding food and energy prices rose 1.4%, decelerating from December’s 1.6% increase and coming in below estimates for rise a 1.5%.

7:24 a.m. ET: Mortgage applications dropped 4.1% last week as interest rates hit the highest level since November

Mortgage applications dropped by 4.1% during the week ending February 5 following a jump of more than 8% during the prior period, according to the Mortgage Bankers’ Association’s weekly report. The drop came as interest rates started to creep higher, pressuring demand, though overall housing market activity remained sharply higher compared to a year ago.

Beneath the headline mortgage application index, refinances fell by 4% from a week earlier, but remained 46% higher than the same week in 2020. Purchases fell by 5% on a seasonally adjusted basis. Unadjusted, however, purchases were up 2% week-on-week and were 17% higher than the year-ago period.

“Mortgage rates have increased in four of the first six weeks of 2021, with jumbo rates being the only loan type that saw a decline last week. Despite some weekly volatility, Treasury rates have been driven higher by expectations of faster economic growth as the COVID-19 vaccine rollout continues,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.

“With the 30-year fixed rate increasing to 2.96%– a high not seen since last November – refinances declined, and their share of total applications dipped to the lowest level in three months,” he added. “Government refinance applications did buck the trend and increase, and overall activity was still 46% higher than a year ago. Demand for refinances is still very strong this winter.”

7:17 a.m. ET Wednesday: Stock futures extend gains overnight, pointing to a higher open

Here’s where markets were trading, as of 7:17 a.m. ET Wednesday morning:

  • S&P 500 futures (ES=F): 3,917.75, up 12.25 points or 0.31%

  • Dow futures (YM=F): 31,360.00, up 82 points or 0.26%

  • Nasdaq futures (NQ=F): 13,726.5, up 46.25 points or 0.34%

  • Crude (CL=F): +$0.27 (+0.46%) to $58.63 a barrel

  • Gold (GC=F): +$3.20 (+0.17%) to $1,840.70 per ounce

  • 10-year Treasury (^TNX): +0.8 bps to yield 1.165%

6:09 p.m. ET Tuesday: Stock futures hold near record levels

Here’s where markets were trading Tuesday evening as overnight trading kicked off:

  • S&P 500 futures (ES=F): 3,911.00, up 5.5 points or 0.14%

  • Dow futures (YM=F): 31,312.00, up 34 points or 0.11%

  • Nasdaq futures (NQ=F): 13,694.50, up 14.25 points or 0.1%

A man wears a protective mask as he walks past the New York Stock Exchange on the corner of Wall and Broad streets during the coronavirus outbreak in New York City, New York, U.S., March 13, 2020. REUTERS/Lucas Jackson
A man wears a protective mask as he walks past the New York Stock Exchange on the corner of Wall and Broad streets during the coronavirus outbreak in New York City, New York, U.S., March 13, 2020. REUTERS/Lucas Jackson

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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48.

Warren Buffett's favorite indicator hints that stocks are significantly overvalued

2021-02-10 18:29:44 by Brian Sozzi from Yahoo Finance

If you are a Warren Buffett investing disciple, then you may want to consider raising some cash by selling a good number of winning positions.

Because the Oracle of Omaha’s favorite stock market indicator is looking frothy, to say the very least.

The “Buffett Indicator” as it’s called in Wall Street circles — which takes the Wilshire 5000 Index (viewed as the total stock market) and divides it by the annual U.S. GDP — is now at a record high amid the latest climb to records in the broader market. In doing the math, the Buffett Indicator stands at about 194% — up markedly from 175% or so when applying third quarter GDP data.

The figure is well above the 159.2% seen just before the dot.com bubble.

“The stock market is significantly overvalued according to the Buffett Indicator,” said researchers at GuruFocus. “Based on the historical ratio of total market cap over GDP (currently at 194.6%), it is likely to return -3% a year from this level of valuation, including dividends.”

August 30th 2020 - Warren Buffett celebrates his 90th birthday. He was born in Omaha, Nebraska on August 30th 1930. - File Photo by: zz/Dennis Van Tine/STAR MAX/IPx 2017 12/14/17 Warren Buffett at the premiere of
August 30th 2020 - Warren Buffett celebrates his 90th birthday. He was born in Omaha, Nebraska on August 30th 1930. - File Photo by: zz/Dennis Van Tine/STAR MAX/IPx 2017 12/14/17 Warren Buffett at the premiere of "The Post" held on December 14, 2017 in Washington, DC.

The Buffett Indicator rose to fame after a 2001 Fortune Magazine article written by Buffett and long-time Fortune writer/Buffett insider Carol Loomis.

“The ratio has certain limitations in telling you what you need to know. Still, it is probably the best single measure of where valuations stand at any given moment,” explained Buffett in the article.

It really shouldn’t be a surprise to see the indicator as inflated as it is today.

Federal Reserve liquidity continues to run rampant and is fueling new record highs in the stock market. Meanwhile, the ongoing COVID-19 pandemic continues to depress economic output.

Get more insight on Buffett’s investing do’s and don’ts here.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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49.

COVID-19 ‘exposed how fragile our food systems are’: Gro Intelligence Founder

2021-02-10 11:00:00 by Yahoo Finance Video

Sara Menker, Gro Intelligence Founder & CEO, joins 'Influencers with Andy Serwer' to discuss how COVID-19 is affecting the food supply chain around the world.


50.

Best FANG Stocks ETFs for Q2 2021

2021-02-09 18:52:59 by Investopedia

FANG is an acronym for Facebook Inc. (FB), Amazon.com Inc. (AMZN), Netflix Inc. (NFLX), and Alphabet Inc. (GOOGL). These companies represent a variety of different sectors, ranging from consumer cyclical to communication services to technology.