The Week in Review

The Week in Review

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Key Takeaways

• Wild swings across asset classes define the week
• ECB vows to keep monetary policy unchanged

The past week turned out to be another roller coaster of volatility as traders and investors navigate through choppy waters pretty much in every asset class from US equities to cryptocurrencies. Wild gyrations in the US stock market defined the week. On Monday, US benchmark indexes underwent mixed trading with Nasdaq closing down nearly 2% to a total decline of 10%. As the tech-heavy index entered a correction, investors feared rising inflation underpinned by rising bond yields.

As the week progressed, the Fed and the Treasury both reiterated that inflation concerns are overblown and that the US will at most go through a steady rise in inflation down the year, instead of a sharp and sudden spike in prices. This became clear with Wednesday’s consumer prices report which showed that inflation was under control and as a result, investors rotated back into growth stocks and mega-cap tech companies that had sustained the most damage in prior sessions.

All three major indexes, Dow Jones, S&P500, and Nasdaq Composite ended the week in green with Dow Jones and S&P500 reaching all-time highs in the week.

Another story that significantly affected the markets was GameStop. Shares in the video-game retailer staged a comeback this week going as high as $348.50. Earlier in the week, GameStop stock added over 60% to its value for no obvious reason and then crashed 40% in less than half an hour. For most of the week, GameStop was hovering near $260.

Widely Anticipated Stimulus Bill is Signed

In Washington, President Joe Biden gave the final approval for the proposed $1.9tn stimulus bill. On Tuesday, the House voted in favor of the legislation that was finally enacted without bipartisan support after months of negotiations. The coronavirus relief package includes, among other measures, $1,400 stimulus checks per individual, funding for vaccine production and distribution, and aid for state and local governments.

On the other side of the Atlantic, Europe remains pressured by ongoing vaccine delivery hassles. Drugmaker AstraZeneca further reduced vaccine doses for the bloc in the first quarter from 90 million to 30 million. On the economic front, the European Central Bank announced Thursday that it will maintain its current monetary policy and ultra-loose borrowing costs to support the economic recovery. ECB President Christine Lagarde signaled that the central bank will speed up its bond-buying program to tackle rising inflation expectations.

Heading to cryptocurrency, bitcoin made another attempt to break above the all-time high. The largest crypto coin moved as high as 18% over the week as crypto participants were once again positive that there is more to the rally. The total market cap of the crypto space was lifted from $1.5tn on Monday to over $1.7tn by the end of the week.