First Weekly Loss of 2021 as Earnings Season Begins

Oh well, the market wasn’t going to rally throughout 2021 anyway, so we might as well get our first weekly losses out of the way.

The major indices all declined for a second consecutive session on Friday, capping off a more tranquil week than the record-breaking pace of late.

The NASDAQ slipped 0.87% (or about 114 points) to 12,998.50 for a weekly decline of 1.6%. Meanwhile, the S&P was off 0.72% to 3768.25 and the Dow declined 0.57% (or around 177 points) to 30,814.26. These indices lost 1.5% and 0.9%, respectively, over the five days.

Last week was much more chaotic, but also much more profitable. The major indices all advanced well over 1.5% despite a couple of runoff elections, a protest on the Capitol floor, and a much worse-than-expected jobs report.

After the closing bell last night, the Biden administration outlined a $1.9 trillion stimulus plan. It’s pretty much what was expected, including payments to Americans of $1400 (bringing the total to $2000 when including the previous stimulus), as well as more federal unemployment benefits, help for local governments, and more.

Therein lies the problem. It was as expected. In other words, it was priced in. In addition, some folks are concerned it’s not enough, while others are wondering how easily it will get through Congress even with the slim Democrat majority.

So the market didn’t get much help.

The beginning of earnings season didn’t provide much sunshine either. Big banks JPMorgan (JPM, -1.79%), Citigroup (C, -6.93%) and Wells Fargo (WFC, -7.8%) all beat earnings expectations, but shares plunged as you can see.

Despite the stimulus and the vaccines, investors are nervous about the slowing economy. We got another disappointing signal today with retail sales that dipped 0.7% in December, which was worse than expected.

Add that to other signposts like last Friday’s weak jobs report, and investors are wondering how much damage will be done while we wait for the vaccines to make a difference.

Perhaps earnings season can occupy some of the market’s mind. Things will start heating up next week, including the first FAANG report (from Netflix (NFLX), on Tuesday, along with other big banks like Bank of America (BAC) and Goldman Sachs (GS).

Today's Portfolio Highlights:

ETF Investor: Given the skyrocketing demand for chips and the emerging growth areas; this portfolio could use more exposure to the space. Neena already owns iShares PHLX Semiconductor ETF (SOXX), which is the portfolio’s best performer at the moment with a gain of more than 260%. And today she added SPDR S&P Semiconductor ETF (XSD). This equal-weighted ETF tilts towards the smaller growth companies; the ones that are still attractively priced and poised to benefit from the global economic recovery. XSD is the cheapest fund in the space and the best-performing chip ETF over the past year. In other news, the editor also sold the underperforming Pacer Benchmark Data & Infrastructure Real Estate ETF (SRVR) for an 18.3% return to make room for the new pick. Read the full write-up for more these moves.

Have a Great Weekend!
Jim Giaquinto

Recommendations from Zacks' Private Portfolios:

Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>

 
Zacks Investment Research