Stocks in the U.S. rebounded following last week’s sell-off. As of Wednesday morning, Energy and Financials were among the best performing sectors while Utilities and Healthcare lagged. All told, the energy component of the S&P 500 index is now up more than 45% year-to-date. Investors saw volatility spike late last week as quadruple witching (options and futures expirations) coincided with the announcement of the annual reconstitution for the Russell US Indexes. In addition, hawkish comments regarding inflation and the tapering of asset purchases from regional Fed President James Bullard on Friday added to the chaos. Despite the increased volumes and uncertainty, the VIX (Implied Volatility) index has since settled down and is now trading at a new 52-week low as of Wednesday. On Tuesday, Fed Chair Jerome Powell testified in front of the Congressional Subcommittee on the Coronavirus. There wasn’t much new information to be provided following his press conference last week, however, it seemed as if he was able to walk back the market’s perception that the FOMC had already moved away from average inflation targeting.
We have an active economic calendar this week in the U.S with PMI (Purchasing Managers’ Index) numbers Wednesday, Durable Goods Orders and GDP on Thursday and the PCE and Michigan inflation series Friday. Overseas, we get PMI data for Germany, France, the U.K. and the Eurozone as a whole on Wednesday. In the bond market, auctions for the 2-year, 5-year, and 7-year Treasury notes are scheduled for this week as well. Interest rates were relatively unchanged this week, with the yield on the 2-year and 10-year Treasury notes trading around 0.25% and 1.48% respectively mid-week.
Source: GSAM, JPM, Business Insider, Morningstar