Market week: Stock indexes lose ground

Market week: Stock indexes lose ground

Sell-the-news retreat as US$2 trillion relief plan announced


The major North American stock indexes registered weekly losses across the board as traders executed a classic “sell the news” action through the week. The news that triggered the profit taking after weeks of gains was President-elect Joe Biden’s announcement of a US$1.9 trillion Covid-19 relief plan, which if passed by Congress will inevitably lead to higher income taxes, capital gains taxes, and corporate taxes. Investors assessed the likely impact of these on consumer spending and corporate earnings down the road, and recalibrated earnings expectations that had floated higher on central bank monetary easing and the continued absence of any fiscal restrain whatsoever.

In addition, analysts fretted over a 0.7% month-over-month drop in U.S. retail sales, the third consecutive monthly decline, also contributing anxiety to the outlook for consumer spending. In Canada, the labour market shed 62,000 jobs in December, almost exactly reversing the gain seen in November. Canada’s December unemployment rate edged up slightly to 8.6% from 8.5%.

The S&P 500 Composite Index and the Nasdaq Composite Index both retreated 1.5% on the week, while Toronto’s S&P/TSX Composite Index slid 0.7%, led by resources, as gold fell 1.2% on the week and crude oil retreated 1.3%.

Monitor the main stock and commodity indices daily with the Fund Library’s interactive Markets Page.

Fund news

* Evolve launches cloud-computing ETF. Evolve Funds Group Inc. announced  on Jan. 11 that it has launched its Evolve Cloud Computing Index Fund (TSX: DATA), which tracks the Solactive Global Cloud Computing Index Canadian Dollar Hedged. The fund invests primarily in equity securities of companies located domestically or internationally that have business operations in the field of cloud computing.

Raj Lala, President and CEO at Evolve, said “The pandemic has increased the need for cloud computing in the midst of work from home mandates, and 2020 rounded out what was already a vastly-advancing decade for the sector.”

The fund is available in both hedged and unhedged Canadian dollar denominated ETF units.

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