Stock Market Recap: Wednesday, Jan. 20, 2021

Wall Street was up for the second straight session with gains leading to another round of fresh all-time highs for the major indexes — and more in Wednesday’s stock market recap. 

President Joe Biden and Vice President Kamala Harris went to work right away following their swearing in today. They signed executive actions to address the coronavirus pandemic, climate change and racial equity.

Stock Market Recap

The Nasdaq rallied 2% with the afternoon all-time high of 13,486.

The S&P 500 surged 1.4% after tagging a record high of 3,859.

The Dow gained 0.8% following the second-half push to 31,235.

The Russell 2000 rose 0.4% with the lifetime peak reaching 2,173 shortly after the opening bell.

Communications Services and Real Estate paced sector strength after soaring 3.1% and 2.1%, respectively. Financials were the only sector laggard after falling 0.4%.

Stock Market Movers

Shares of Ford Motor Co. (NYSE: F) broke out to a fresh 52-week peak following a price target upgrade to $11 from $9. The analyst kept a Hold rating on the shares and sees strong volume growth in 2021 for U.S. autos. This growth is helped by low inventories and coronavirus-induced demand for comfort, privacy and protection.

Stock Market Outlook 

The AAII Sentiment Survey revealed bullish sentiment closed at 45.2% last week. Optimism has remained above its historical average of 38% for the 10th straight week.

Neutral sentiment was at 23.1% and below its historical average of 31.5%.

Bearish sentiment was seen at 31.7%. Pessimism was above its historical average of 30.5% for the first time in 10 weeks.

Global Economy

From the global stock market recap, European markets settled higher across the board.

The Belgium20 rose 0.9% and Germany’s DAX 30 soared 0.8%. The Stoxx 600 was up 0.7% and France’s CAC 40 advanced 0.5%. The UK’s FTSE 100 was higher by 0.4%.

Asian markets closed mostly higher with Japan underperforming ahead of the two-day Bank of Japan meeting.

Hong Kong’s Hang Seng jumped 1.1% and South Korea’s Kospi gained 0.7%. China’s Shanghai added 0.5% and Australia’s S&P/ASX 200 climbed 0.4%. Japan’s Nikkei declined 0.4%.

U.S. Economy

Mortgage Bankers Association reported mortgage applications slipped -1.9% last week following the 16.7% surge in the prior week. Compared to the same week last year, the index posted a 59.1% year-over-year clip, down from 61.8% previously. All of the weakness was in the refi component, which dropped -4.7%. However, it is still up 86.7% year-over-year versus 92.5% previously. The purchase index rose 2.7% versus the prior 8% previously and is 14.7% higher year over year, compared to 92.5%. The 30-year mortgage rate edged up to 2.92% rate versus 2.88% previously. The five-year ARM rate increased to 2.76% versus the 2.66% in the prior week.

Stock Market Sentiment

The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) extended its winning streak to three straight sessions with the session high reaching $152.48. Near-term and lower resistance at $152.50-$153 was challenged but held. Continued closes above the $154 level would be a more bullish development and signal a possible near-term bottom.

Support is at $151.50-$151 followed by $150.50-$150.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the second straight session with the late low tapping 21.37. Current and upper support at 21.50-21 was tripped but held. A move below the latter would signal further weakness towards 20.50-20.

Lowered resistance is 22.50-23 and the 50-day moving average.

Stock Market Analysis

The S&P 400 Mid Cap Index (NYSE: MID) was up for the second straight session after testing an all-time intraday high of 2,470. Unchartered territory and lower resistance at 2,450-2,475 was cleared and held. A close above the latter would indicate further momentum towards 2,500-2,525.

Fresh support is at 2,425-2,400 followed by 2,375-2,350.

RSI (relative strength index) is in an uptrend with lower resistance at 70-75 getting cleared and holding. A move above the latter would signal a possible run towards 80 and the overbought peak from early October 2017. Support is at 65-60.

Sector

The Health Care Select Sector SPDR Fund (NYSE: XLV) extended its winning streak to three sessions with the record peak hitting $118.69. New and lower resistance at $118.50-$119 was breached but held. A close above the latter would signal continued strength towards $120-$120.50.

Support is at $117.50-$117 with backup help at $116-$115.50.

RSI remains in an uptrend with key resistance at 70 getting recovered. Continued closes above this level would indicate additional upside towards 75-80 with the latter representing the monthly high. Support is at 65-60.

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Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.