Stock Market Recap: Wednesday, Feb. 17, 2021
Wall Street was weak throughout while awaiting the release of the Federal Reserve minutes from the January meeting — and more in Wednesday’s stock market recap.
The major indexes bounced off their lows but still settled lower after the minutes revealed the Fed was more optimistic about the long-term health of the economy.
Specifically, most Fed officials thought the stimulus passed in December, along with the possibility of more this year and vaccine progress, would lead to a sizable boost in economic activity. Additionally, the Fed was not concerned about inflation, with most officials saying that inflation risks were weighted towards too low rather than too high.
Stock Market Recap
The Dow rose 0.3% after tapping a late-day record high of 31,643.
The S&P 500 slipped 0.03%, with the intraday low tapping 3,900.
The Nasdaq gave back 0.6% following the first-half backtest to 13,804.
The Russell 2000 fell 0.7% after testing a low of 2,226.
Energy and Consumer Discretionary led sector strength after rising 1.5% and 0.6%, respectively. Technology was the weakest sector with a loss of 0.9%.
Stock Market Movers
EHang Holdings Ltd. (Nasdaq: EH) rebounded nearly 68% after responding to a research report accusing the company of being an elaborate stock promotion built on fabricated revenues. The company says the report contained numerous errors, unsubstantiated statements and misinterpretation of information.
EHang added it will consider any necessary and appropriate course of action to protect the interests of the company and all of its shareholders. EHang is a Chinese autonomous passenger drone-maker that went public in 2019 with plans to also make self-flying taxis.
Stock Market Outlook
Dow component Walmart Inc. (NYSE: WMT) will announce fourth-quarter earnings ahead of Thursday’s opening bell. The company is expected to report a profit of $1.51 a share on revenue of $148.47 billion. The high estimate is at $1.74 a share with the low forecast at $1.40 and would equate to a 23-cent beat or an 11-cent miss.
The company has topped forecasts over the past three quarters by 16, 31 and six cents, while missing by five cents in the year ago period. There are 33 analysts that cover the stock with nine Strong Buy ratings, 10 Buys, 13 Holds and one Sell recommendation.
Global Economy
From the global stock market recap, European markets settled lower across the board.
Germany’s DAX 30 declined 1.1% and the Stoxx 600 gave back 0.7%. The UK’s FTSE 100 was off 0.6% and the Belgium20 declined 0.5%. France’s CAC 40 was down 0.4%.
Asian markets closed mostly lower.
South Korea’s Kospi dropped 0.9% and Japan’s Nikkei fell 0.6%. Australia’s S&P/ASX 200 was down 0.5%. Hong Kong’s Hang Seng gained 1.1%. China’s Shanghai remained closed until Thursday for the Lunar New Year holiday.
U.S. Economy
MBA Mortgage Applications sank -5.1% last week after dropping -4.1% in the prior week. The purchase index slumped -6.1% after the -4.7% tumble previously. The refi gauge was down -4.7% versus the -4.2% pullback previously. The 30-year fixed rate rose to 2.98% after edging up to 2.96% in the prior week. The five-year ARM dipped to 2.83% from 2.92%.
Producer Price Index increased 1.3% overall and 1.2% on the core in January, following December increases of 0.3% and 0.1%, respectively. On a 12-month basis, headline PPI surged to a 1.7% year-over-year growth rate versus 0.8%, and was at a 2% rate year-over-year for the core versus 1.2% previously.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was up for the first time in four sessions with the morning high hitting $146.38. Fresh and lower resistance at $146-$146.50 was breached but held. A close above the latter would indicate additional strength towards $147.50-$148.
New support is at $145.50-$145.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the second straight session after testing a high of 23.44. Near-term and lower resistance at 23-23.50 was breached but held. A close above the latter and the 50-day moving average would suggest upside towards 24.50-25.
Rising support is at 21-20.50 followed by 20-19.50.
Stock Market Analysis
The Wilshire 5000 Composite Index (NYSE: WLSH) fell for the second straight session following the intraday pullback to 41,579. Current and upper support at 41,750-41,500 was tripped but held. A move below the latter would indicate additional weakness towards 41,250-41,000.
Resistance is at 42,000-42,250 with Tuesday’s all-time peak at 42,290.
RSI (relative strength index) is in a slight downtrend with upper support at 65-60 holding. A move below the latter would signal weakness towards 55-50. Resistance is at 70-75.
Sector
The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) had its four-session winning streak snapped following the intraday drop to $425.91. New and upper support at $426-$425.50 was breached but held. A close below the latter would suggest additional risk towards $423.50-$423.
Resistance $434.50-$435 followed by $437.50-$438 with Tuesday’s all-time record high at $443.97.
RSI has rolled over with key support at 60 holding. A close below this level would signal additional weakness towards 55-50. Resistance is at 65-70.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.