The S&P 500 (SPY) and the NASDAQ-100 (QQQ) stock indexes have come under pressure over the last few days. This pressure may stem from the rising 10-year yield, but the indexes haven’t been treated equally. The SPY is down ~2.3%, while the QQQ is down ~5.9% over the last five days. I believe this is due to the QQQ being up ~40% vs. SPY being up ~16% in the rolling one year. The tech laden QQQ has benefited greatly from the COVID environment and COVID fears are diminishing due to vaccines and natural immunity people get after being infected. I’m still optimistic on the market as we still have very low interest rates, inflation and a stimulus bill on its way.
COVID Update
Even though the vaccine rollout has been problematic, the reopening play was the primary driver of return this year. The vaccine deployment has been criticized; however, it’s really starting to gain steam. We have three effective vaccine options in the U.S. made by Moderna, Pfizer and Johnson & Johnson. A vaccine will be available to everyone in short order. Below is a quote taken from JPMorgan.
"As of today, February 16th, over 70 million doses of vaccine have been delivered with over 50 million doses administered. Adding those who have now received at least one dose of the vaccine to all those who contracted the virus over the past year suggests that over 40% of Americans now likely have some immunity to Covid 19. The seven-day moving average of administered doses is now above 1.6 million and climbing."
Per the CDC, people over 65 years old makeup ~45% of all hospitalized patients. We are currently vaccinating all people in this demographic, so this number should drop down to virtually zero. Those who decide not to be vaccinated will do so at their choice and their own risk.
People over the age of 65 represent 81% of all deaths and only 14% of all cases. The death rate in this age bracket that tested positive for COVID is 9.7%. (CDC website)
As I digress, school age children between 5 and 17-year-old make up .1% of the deaths and 9.4% of the cases. This represents a .1% death rate. College age student between 18 and 29 years old make up .5% of the deaths and 22.4% of the cases. This represents a .03% death rate. These are worst case scenarios as I assume many in these age categories aren’t even tested or are asymptomatic.
ETF of the Week: DJ Industrial Average ETF (DIA)
SPDR Dow Jones Industrial Average ETF Trust (DIA) was the best performing ETF last week. The index consists of 30 large cap domestic stocks selected by an investment committee. This index is price weighted so a stock with a higher price impacts the index greater than a lower priced stock.
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