Stock Market Recap: Monday, Feb. 22, 2021
Wall Street was weak throughout but rebounded midday before settling lower for the session — and more in Monday’s stock market recap.
Tech underperformed while the blue chips outperformed as rising Treasury yields and expectations of higher inflation weighed on sentiment. Specifically, the yield on the benchmark 10-year Treasury note briefly traded above 1.39% to reach a fresh one-year high. Meanwhile, volatility spiked to a new multi-week high but held a key level of resistance into the closing bell.
Stock Market Recap
The Dow was up 0.1% with the intraday all-time peak hitting 31,653.
The S&P 500 fell 0.8% following the intraday pullback to 3,874.
The Russell 2000 sank 0.7% after trading to an opening low of 2,247.
The Nasdaq tanked 2.5% with the low tapping 13,530 ahead of the closing bell.
Energy led sector strength after surging 3.5%. Technology and Consumer Discretionary paced sector laggards with losses of 2.2% and 2.1%, respectively.
Stock Market Movers
Cooper Tire & Rubber Company (NYSE: CTB) shares zoomed 29% after announcing they will be acquired by Goodyear Tire & Rubber Company (Nasdaq: GT) for approximately $2.5 billion. Under the terms of the transaction, Cooper shareholders will receive $41.75 per share in cash and a fixed exchange ratio of 0.907 shares of Goodyear common stock per Cooper share.
Upon closing the transaction, Goodyear shareholders will own approximately 84% of the combined company, and Cooper shareholders will own about 16%.
Stock Market Outlook
Macy’s Inc. (NYSE: M) will announce fourth-quarter earnings ahead of Tuesday’s opening bell. The company is expected to report a profit of 12 cents a share on revenue of $6.5 billion. The high estimate is at 73 cents a share with the low at a 22-cent loss. This would equate to a blowout 61-cent beat or a 10-cent miss.
The company has topped forecasts in three of the past four quarters by 60, 96 and 16 cents, while matching forecasts in between. There are 17 analysts that cover the stock with one Strong Buy rating, one Buy, 10 Holds, four Underperform, and one Sell recommendation.
A move above key resistance at the $16 level could propel shares towards higher highs, while a drop below $14 could signal a further back-test toward the 50-day moving average.
Global Economy
From the global stock market recap, European markets settled lower despite news that the U.K. Prime Minister Boris Johnson outlined a roadmap to gradually reopen the economy.
The Stoxx 600 fell 0.4% while the Belgium20 and Germany’s DAX 30 were down 0.3%. The U.K.’s FTSE 100 slipped 0.2% and France’s CAC 40 dipped 0.1%.
Asian markets closed lower after China left its benchmark lending rate unchanged.
China’s Shanghai sank 1.5% and Hong Kong’s Hang Seng dropped 1.1%. South Korea’s Kospi declined 0.9% and Australia’s S&P/ASX 200 was off 0.2%. Japan’s Nikkei advanced 0.5%.
China’s one-year loan prime rate (LPR) was left unchanged at 3.85%, largely in line with expectations. The five-year LPR was also kept steady at 4.65%.
U.S. Economy
Chicago Federal Reserve National Activity Index rose 0.25 points to 0.66 in January following the 0.07 point increase to 0.41 in December. The three-month moving average pulled back to 0.47 from 0.60. The report noted 53 of the 85 indicators made positive contributions, while the remaining 32 made negative contributions.
Leading Indicators edged up 0.5% to 110.3 in January following the 0.4% rise to 109.7 in December. Seven of the 10 indicators posted gains, led by building permits (0.29%) and the average workweek (0.11%). Jobless claims were the weakest negative contributor (-0.16%).
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the third straight session following the intraday pullback to $141.72. Fresh and upper support at $142-$141.50 was breached but held. A move below the latter would indicate additional weakness towards $140.50-$140.
Lowered resistance is at $143.50-$144 followed by $145-$145.50.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the fourth time in five sessions after testing a high of 25.09 while holding its 50-day moving average into the closing bell. Prior and lower resistance from late January at 25-25.50 was breached but held. A close above the latter would suggest upside towards 26-26.50 and the 200-day moving average
Rising support is at 22.50-22 followed by 21-20.50.
Stock Market Analysis
The SPDR Small-Cap 600 ETF (NYSE: SLY) was up for the second straight session with the intraday high reaching $92.92. Near-term and lower resistance at $92.50-$93 was cleared but held. A close above the latter and the current all-time peak at $93.14 would suggest a possible breakout towards $94.50-$95.
Rising support is at $91.50-$91 followed by $90-$89.50.
RSI (relative strength indicator) is in an uptrend with lower resistance at 65-70 getting cleared and holding. A close above the latter would indicate additional strength towards 75 and the slightly overbought high from earlier this month. Key support is at 60.
Sector
The Communication Services Select Sector SPDR (NYSE: XLC) extended its losing streak to three sessions following the morning fade to $71.74. Fresh and upper support is at $72-$71.50 was tripped but held. A close below the latter would suggest further weakness towards $70.50-$70.
Resistance is at $73-$73.50 with the current record peak at $73.85.
RSI is trying to flatten out with key support 60 holding. A drop below this level would indicate additional weakness towards 55-50 with the latter representing the late-January low. Resistance is at 65-70.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.