Your Thursday Blip 3/4/21

Your Thursday Blip 3/4/21

Markets took a tumble after Federal Reserve Chair Powell said he expects economic reopening to cause inflation but added that price increases will not be enough to cause the Fed to raise short term interest rates. During the day the Dow traded in positive territory thanks to strength in value stocks but at the close the Dow finished lower by 345 at 30,924 on heavy trading volume. IBD noted that recent trading activity means the market rally, which is already under pressure may now be headed for at least a near term correction.
Oil prices surged after OPEC + agreed to extend current output cuts. The move surprised oil traders and oil prices jumped in response with WTI crude trading up over 4% to $63.80 per barrel.
Brian Wesbury, First Trust economist, Honorary member of the Westport Mafia and University of Montana grad reported on the latest release of US Service Sector activity. The latest reading missed estimates in February after a multi-year high reading in January. But remember says Brian, readings above 50 signal expansion, so the decline of the index in February to 55.3 represents continued growth for the service sector, just at a slower pace than in January. While the headline reading declined, growth became more broad-based, with seventeen of eighteen industries reporting growth on the month (up from fourteen in January). It's also worth noting that comments from survey respondents were broadly positive, such as "declining COVID-19 cases… combined with the increased vaccination rates, should bode well for our increased business activity moving into the second quarter of 2021." These data points show that the US service sector could be poised to boom in the coming months as lockdowns end and life gets back to normal.