Week in Review: February 5, 2021

US equity markets enjoyed their best week since November, encouraged by the prospects of additional fiscal stimulus. The S&P 500 and NASDAQ ended the week at new record highs. In Washington, President Biden remained committed to passing his $1.9T stimulus plan arguing that January’s weak employment report demonstrated the risk of doing “too little”. In preparation, the House and Senate passed a budget resolution that would allow Democrats to use reconciliation to pass the measure with a simple majority. Expectations are that the additional stimulus could be passed within a matter of weeks.

Oil reached a one-year high, aided by OPEC+ maintaining its current production cuts and the hope that new stimulus and the further rollout of vaccines will lead to increased demand in 2021.

After struggling through a surge in cases in November and December, new coronavirus cases in the US have dropped as the vaccine rollout begins to outpace the spread of the virus. On January 8, the country reported 260k new cases. By February 3, that figure had dropped 47% to 136k. On Thursday, Johnson and Johnson announced that it had submitted its one-dose vaccine candidate to the FDA for emergency use.

Through Friday, 59% of S&P 500 companies had reported fourth quarter earnings, with 81% beating their consensus estimate. Currently, fourth quarter earnings are expected to contract 2.4%, far better than the expected 9% decline estimated at the start of earnings season.