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Stocks continue on path of least resistance, chalk up fresh ATHs again

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  • It was a subdued day on Wall Street, but all three major indices hit fresh all-time highs.
  • The S&P 500 closed 0.11% higher, the Nasdaq Composite rose 0.56% and the Dow was flat.

It was a subdued day on Wall Street, with most major stock indices finishing the session almost exactly where they begun it amid a lack of fresh macro catalysts. The S&P 500 closed 0.11% higher, the Nasdaq Composite rose 0.56% and the Dow was flat. All three hit intraday record highs.

No particular news or theme can be easily attributed as being behind the day’s gains; market commentators continue to point vaguely at the themes of “stimulus hopes” and “vaccine optimism”, which in fairness are still both very relevant themes that will both likely drive further upside in risk assets (and perhaps downside in the US dollar) as long as they are accompanied by an accommodative Fed.

US data appeared not to have much of an impact on broader economic sentiment; initial weekly jobless claims were not as bad as expected but still pretty ugly at 900K, Housing data showed the sector still on fire and one of the earliest indicators as to the performance of the manufacturing in January, the Philly Fed index, showed an improvement in the sector. Various analysts commented that the data combo underscores the K shaped economic recovery currently underway in the US; in other words, low wage service sector employees and the service sector more broadly is being absolutely devastated by the pandemic, while consumption shifts away from experiences and towards psychical goods, which underpins the manufacturing sector, and loose monetary policy pumps the housing market, further widening the gap between the economic haves and have nots. This dynamic ought to underscore the need for more fiscal and monetary stimulus in the eyes of the policymakers pulling the strings in the US right now.

In terms of the sectoral breakdown; Tech did well, with Apple finishing the session up 3.7%, while chipmakers benefitted after Intel mistakenly released its Q4 earnings report before the close, which was solid. Energy stocks suffered, amid indecisive crude oil and energy markets and US President Joe Biden took decisive executive action against domestic US fossil fuel activities (Biden signed an order to halt the approval of new drilling permits and leases across US federal lands for 60 days).

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