Investors are showing signs of increasing exuberance, reflecting optimism about a vaccine-fueled global recovery and the changed economics of the post-coronavirus world.
The Dow Jones Industrial Average rose 1.6% for the first week of 2021, marking its fourth-straight weekly gain despite a mob storming the U.S. Capitol Wednesday and a decline in nonfarm payrolls reported Friday.
When economically sensitive sectors and bond yields rise together, it often signals Wall Street is embarking on the classic reflation trade that anticipates a full-fledged economic recovery. It is important because it can herald rising incomes, stronger results at firms from retailing to manufacturing to technology, and further market gains.
But the blistering, stimulus-fueled rally over the past year may complicate that formula. While the case for economic recovery appears sound and many fund managers expect the market advance to continue, skeptics say stocks remain vulnerable to fallout from the pandemic, including still-high unemployment and questions about the pace of the vaccine rollout. Supercharged gains in assets from some favored stocks to cryptocurrencies to some commodities could turn out to be unsustainable.
Below, some of the best analysis and insight from WSJ writers and columnists, the Dow Jones Newswires team and occasionally beyond, on investing, the wealth-management business and more.
CORONAVIRUS OUTLOOK
U.S. Companies Revamp Bonus Plans as Pandemic Upends Forecasts: Some boards are scrapping existing formulas and instead using their judgment to set annual incentives.
PLANNING & INVESTING
The Great Outdoors Offers Retail Winners: In a year during which a widespread return to theaters, concerts and travel remains up in the air, consumers are likely to continue finding value in outdoor activities. Investors might, too.
TikTok and Discord Are the New Wall Street Trading Desks: A new army of social media-enabled day traders is helping push stocks to records and turning companies into market sensations.
MARKET TALK
From Dow Jones Newswires
While Saudi Arabia’s voluntary 1 million-barrel-a-day cuts in February and March will lift oil prices and benefit OPEC-plus nations, it will also have the added effect of helping their main competitors: U.S. shale oil producers, Eugen Weinberg, head of commodity research at Commerzbank, says. “The rising oil price is also a double-edged sword for OPEC-plus: after all, this strengthens the competition too,” Weinberg says. “It can be assumed that higher oil prices will accelerate the return of the shale oil sector,” he adds. Traders will be looking to the EIA short-term outlook on Tuesday for details on this. (william.horner@wsj.com)
The global pile of negative-yielding keeps swelling to fresh record highs, hindering fixed-income managers’ job to deliver returns for their clients. Pictet Asset Management’s Luca Paolini says that there are now $18 trillion of global bonds trading at a negative yield, meaning that “its going to be a tough environment for fixed income investors, particularly with inflationary pressures also on the horizon.” This level surpasses the previous peak of $17.05 trillion a few months ago and means that buyers are likely to make a loss if they hold the paper to maturity. (lorena.ruibal@wsj.com)
BUSINESS & PRACTICE
Low on Workers, Manufacturers Recruit Their Executives for the Factory Floor: Covid, child care and competition from e-commerce warehouses contribute to labor shortages at many factories.
IMPACT INVESTING
Walmart Is Adopting Socially Responsible Policies. ESG Funds Are Taking Notice: The giant retailer has rolled out ambitious environmental initiatives and introduced programs to improve workplace conditions, support public health, and champion gun safety.
TALKING POINTS
A Doctor Launches Her Passion Project: Selling ‘Green’ Beauty Products: It Practicing medicine was satisfying but not thrilling—so Dr. Pooja Goel began selling cosmetics, hair-care and skin-care products online.
TRAVEL & LIFESTYLE
The Lies We Tell During Job Interviews: Interviewers and candidates often end up in situations where they’re almost encouraged to lie—here’s what research says about how, why and how often it happens.
ABOUT US
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SOURCE: MoneyBeat – Read entire story here.
