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Markets Mixed as Focus Turns to Wednesday

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Market rotation continues as a new trading week closes its first day. We’re more clear on this now than we may have been a few weeks ago when this new trend began; the specter of rising interest rates due to inflation — down the road (somewhere) — caused market participants to put their shoes back on and begin cleaning up after the “party.” Over-extended tech valuations continued to face the music today: the Nasdaq fell 2.41%, down 5% over the past week.

The Dow finished in the green, up 0.97% but off its intra-day all-time high of 32,140. The blue chips have reaped the rewards of the excesses of the Nasdaq heavy hitters. Just look at Disney DIS, up 6.3% on today’s announcement that the company’s Southern California amusement parks will re-open April 1st; Tesla (TSLA - Free Report) , from the $850 per share it was trading at a month ago, was down another 5.8% today, to $563 per share.

The S&P 500, which began the day flat, finished up pretty much in the same place, though it did slide into the red not long before today’s closing bell, -0.54%. The small-cap Russell 2000 followed the Dow higher this Monday, +0.49%. It appears to have de-coupled itself from the high-valuation tech names that sent tech stocks on the Nasdaq accelerating downward into the close. For the Dow, it’s now on a two-day winning streak.

Wholesale Inventories for January outperformed expectations — +1.3% vs. the 0.9% estimate, following the upwardly revised +0.6% from December. Of course, this is a lagging number that only accentuates the Manufacturing bounce-back we saw in other economic metrics over the past month. Still, it’s useful to be reminded that when the economic boom does come, it will be a lot more than just the Services side of the economy expected to benefit.

The big news this week will likely come Wednesday, when the House will reportedly vote on the Senate-passed stimulus/relief bill from over the weekend. Particular changes forced by Senator Joe Manchin (D - WV) has created more reading assignments for clerks on the Hill. No Republican members of Congress are expected to vote in favor of the $1.9 trillion package, but President Biden has already indicated he will sign it into law as soon as it passes the House.

The most recent congressional stimulus package passed both houses of Congress back in December, and elements such as Pandemic Unemployment Assistance (PUA) — which has kept things like Continuing Jobless Claims on an orderly downward trajectory — are scheduled to expire six days from now. Which means Congress has again waited to the last possible week to pass this historically massive bill, the effects of which will begin to be felt once new stimulus checks hit household bank accounts.

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