By Scotia Wealth Management - The Zukiwsky Group

SPONSORED

MARKET WATCH: March 5, 2021

Mar 5, 2021 | 9:56 AM

Big Picture

Tech Stocks Volatile as Concerns Persist Over Rising Yields, Inflation

It was a strong start to the week as the S&P 500 surged Monday in its strongest single-day rally since June. All 11 S&P 500 sectors rallied, led by financials and tech. By Monday’s close, the S&P was up 91 points, the Dow jumped 603 and the Nasdaq added nearly 400. In Canada, the TSX also registered strong, broad-based gains, adding 240 points. U.S. stocks fell Tuesday, as investors once again retreated from high-flying technology names as concerns over rising bond yields and inflation re-emerged, even though bond yields retreated slightly on Tuesday. The Nasdaq shed 230 points, while the Dow and S&P registered smaller losses. In Canada, the TSX bucked the trend, adding 122 points, supported by rising gold prices.

It was another rough day for the Nasdaq Wednesday as investors sold off technology names in favour of cyclicals. The technology-heavy Nasdaq plunged 361 points; the TSX dropped 101, also on technology weakness; while the S&P fell 121. The fear among many investors is that rising interest rates and the spectre of stimulus-induced inflation could disproportionately hurt the future earnings and valuations of high-growth technology names.

The technology selloff intensified Thursday and Treasury yields rose above 1.54%, despite Fed Chair Powell’s pledge to keep interest rates low. The Nasdaq lost 274 points — nearly finishing in correction territory – while the Dow and S&P surrendered 346 and 51, respectively. Meanwhile, the TSX closed down 195 points, although rising crude prices helped temper Thursday’s overall losses.

50-70 mm

Rainfall warning issued for Red Deer area

1h ago

to speak at upcoming conference

Former Red Deerian shares recovery journey from drugs and crime, suggests possible solutions

May 05, 2024

judicial review to continue in june

Day 3 of LaGrange v. Red Deer Catholic: The meme had, "nothing to do with the Holocaust"

May 03, 2024

U.S. Markets Lose Ground, TSX Slightly Up

For the four trading days covered in this report, the Dow lost 8 points to close at 30,924, the S&P 500 shed 43 points to settle at 3,768, while the tech-heavy Nasdaq plunged 469 points to close at 12,723. In Canada, the TSX bucked the trend, gaining 65 points to end at 18,125.

Strategy

The U.S. labour market’s recovery continued in February

Non-farm payrolls increased by 370,000 after an upwardly revised 166,000 gain in January and ahead of consensus estimates predicting a 200,000 increase. The unemployment rate ticked lower to 6.1% as the participation rate remained steady at 61.4%.

The leisure and hospitality sectors, which were the hardest-hit by the pandemic, gained 355,000 jobs accounting for most of the increase. Government employment declined the most reflecting cutbacks in state and local education followed by construction, while other sectors had modest gains.

Total hours worked dropped 0.5% month-over-month, and the prior month’s reading was revised lower to 0.7%. Overall, there were nearly 10 million unemployed Americans in February, almost double its pre-pandemic level. Over 40% of the unemployed have been out of work for 27 weeks or more, up 125,000 from January at 4.1 million. While the report is undoubtedly positive, there is softness in the details, including the lack of breadth and decline in total hours worked.

We believe the Federal Reserve is likely to look through the short-term narrative, focusing on its medium-term outlook that shows broad improvement over the course of the year.

_Disclaimer

_{This report is provided to you for informational purposes only and is not intended to provide personal investment advice. This report does not include or constitute an investment recommendation and does not take into account the particular investment objectives, financial conditions, or specific needs of individual clients. Any statements regarding future prospects may not be realized. Before acting on this material, you should consider whether it is suitable for your particular circumstances and talk to your investment advisor.}

_{The author(s) of the report and the supervisors of the Global Portfolio Advisory Group may own securities of the companies included herein.}

_{Scotia Capital Inc. is what is referred to as an “integrated” investment firm since we provide a broad range of corporate finance, investment banking, institutional trading and retail client services and products. As a result we recognize that there are inherent conflicts of interest in our business since we often represent both sides to a transaction, namely the buyer and the seller. While we have policies and procedures in place to manage these conflicts, we also disclose certain conflicts to you so that you are aware of them. Please note that we may have, from time to time, relationships with the companies that are discussed in this report.}

_{The Global Portfolio Advisory Group prepared this report by analyzing information from various sources. Information obtained in the preparation of this report may have been obtained from the Equity Research and Fixed Income Research departments of the Global Banking and Markets division of Scotiabank. Information may be also obtained from the Foreign Exchange Research and Scotia Economics departments within Scotiabank. In addition to information obtained from members of the Scotiabank group, information may be obtained from the following third party sources: Standard & Poor’s, Morningstar, Bloomberg, Credit Suisse AG, Perimeter Markets Inc., and FactSet. The information and opinions contained in this report have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness.}

_{While the information provided is believed to be accurate and reliable, neither Scotia Capital Inc., which includes the Global Portfolio Advisory Group, nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Neither Scotia Capital Inc. nor its affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.}

_{Nothing contained in this report is or should be relied upon as a promise or representation as to the future. The pro forma and estimated financial information contained in this report, if any, is based on certain assumptions and analysis of information available at the time that this information was prepared, which assumptions and analysis may or may not be correct. There is no representation, warranty or other assurance that any projections contained in this report will be realized.}

_{Opinions, estimates and projections contained herein are those of the Global Portfolio Advisory Group as of the date hereof and are subject to change without notice. For that reason, it cannot be guaranteed by The Bank of Nova Scotia or any of its subsidiaries, including Scotia Capital Inc. This report is not, and is not to be construed as: (i) an offer to sell or solicitation of an offer to buy securities and/or commodity futures contracts; (ii) an offer to transact business in any jurisdiction; or (iii) investment advice to any party. Products and services described herein are only available where they can be lawfully provided. Scotia Capital Inc. and its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities and/or commodities and/or commodity futures contracts mentioned herein as principal or agent.}

_{Trademarks are the property of their respective owners.}

_{Copyright 2021 Scotia Capital Inc. All rights reserved.}

_{This report is distributed by Scotia Capital Inc., a subsidiary of The Bank of Nova Scotia. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.}

_{® Registered trademark of The Bank of Nova Scotia, used under licence. Scotia Wealth Management® consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc. Private banking and International private banking services are provided in Canada by The Bank of Nova Scotia. Estate and trust services are provided by The Bank of Nova Scotia Trust Company. Portfolio management is provided by 1832 Asset Management L.P. and 1832 Asset Management U.S. Inc. Insurance services are provided by Scotia Wealth Management Insurance Services Inc. Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of Scotia Capital Inc. International investment advisory services are provided in Canada by Scotia Capital Inc. Financial planning services are provided by The Bank of Nova Scotia, 1832 Asset Management L.P., and ScotiaMcLeod, a division of Scotia Capital Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Scotia Wealth Insurance Services Inc. is the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank group of companies. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Insurance Agents (Financial Security Advisors in Quebec) representing Scotia Wealth Insurance Services Inc.}

_{Scotia Wealth Management consists of a range of financial services provided, in The Bahamas, by Scotiabank (Bahamas) Limited and The Bank of Nova Scotia Trust Company (Bahamas) Limited. International private banking services are provided in The Bahamas by Scotiabank (Bahamas) Limited, an entity registered with The Central Bank of The Bahamas. International investment advisory services are provided in The Bahamas by Scotiabank (Bahamas) Limited, an entity registered with The Securities Commission of The Bahamas. International wealth structuring solutions are provided in The Bahamas by The Bank of Nova Scotia Trust Company (Bahamas) Limited, an entity registered with The Central Bank of The Bahamas.}

_{Scotia Wealth Management consists of international investment advisory services provided, in Barbados, by The Bank of Nova Scotia, Barbados Branch, an entity licensed by the Barbados Financial Services Commission.}

_{Scotia Wealth Management consists of a range of financial services provided, in the Cayman Islands, by Scotiabank & Trust (Cayman) Ltd. International private banking services, international investment advisory services and international wealth structuring solutions are provided in the Cayman Islands by Scotiabank & Trust (Cayman) Ltd., an entity licensed by the Cayman Islands Monetary Authority.}

_{Scotia Wealth Management consists of international private banking services provided, in Peru, by Scotiabank Peru S.A.A, an entity supervised by the Peru Superintendence of Banking and Insurance.}