Interest rates at the long end of the yield curve have risen sharply and we anticipate they will head modestly higher over the next few quarters. The curve (2yr/10yr spread) has steepened from 82 basis points at the start of the year to 145 basis points. While the Fed will focus more on unemployment than inflation, and has pledged to keep short-term rates low, it has less influence over the long end of the yield curve. Bond investors at the long end of the yield curve are concerned inflation may spiral out of control, especially if Congress rolls out another massive spending plan. The rising long-term interest rates and steepening yield curve hold several implications for investors. One, higher rates raise valuations on equities, and this has caused the stock sell-off over the past few days. But the steeper yield curve also signals the U.S. economy may be rebounding sharply in a few months. And the wider spread between short-term and long-term bonds is beneficial for most of the Financial Services sector.

Stocks fell on Thursday morning, reversing Wednesday's gains, following mixed earnings reports and new employment data. The Labor Department said that first-time claims for state unemployment benefits fell to 730,000 for the week ended February 20, down from a revised 841,000 a week earlier and below the Bloomberg consensus forecast of 825,000. Moderna shares rose 6%, despite a wider-than-expected 4Q loss, as revenue far exceeded the consensus estimate. The company also said that it expected to produce at least 700 million doses of its coronavirus vaccine this year, up from its prior forecast, and 1.4 billion in 2022. The Dow fell 0.4%, the S&P 0.7%, and the Nasdaq 1.0%. Crude oil fell slightly to $63 per barrel, while gold traded near $1781 per ounce.

Stocks reversed early losses on Wednesday morning amid a second day of congressional testimony from Fed Chair Jerome Powell, who again signaled that the central bank would not raise interest rates in the near term. Investors also weighed a favorable FDA analysis of Johnson & Johnson's coronavirus vaccine, and a planned executive order from President Biden that would strengthen U.S. supply chains in such areas as semiconductors, pharmaceutical ingredients, and critical rare earth minerals. On the housing front, the Commerce Department reported that sales of new homes rose 4.3% in January to an annualized 923,000, above the Reuters consensus forecast of 855,000. The Dow rose 0.6%, the S&P 0.5%, and the Nasdaq 0.2%. Crude oil traded near $63 per barrel, while gold fell $12 to $1793 per ounce.

During the opening 20 minutes of Tuesday's session, it looked a lot like another bloodbath for Technology, the Nasdaq, and the Nasdaq 100 (QQQ) -- and a not-so-great day for most of the other major indices. But with many of those indices hitting key support right after the opening (amazing how they do that), the losses evaporated just like the snow will in the mid-Atlantic.

Insider sentiment continues to reflect a reasonable degree of caution, suggesting executives, directors and beneficial owners see few near-term catalysts that are likely to drive stock prices quickly higher any time soon. By way of some supporting data, we offer the proprietary eight-week sell/buy ratios from Vickers Stock Research. The ratios are bearish when they are above 2.50. These longer-term sentiment gauges have hung at cautious levels for about two months now. Vickers' NYSE/ASE Eight-Week Sell Buy Ratio is currently 5.26, and has been in a range of 5.00 to 5.72 for the past nine weeks. In those same nine weeks, Vickers' Total Eight-Week Sell Buy Ratio (which adds in insider transaction on the Nasdaq) has been in a range between 5.28 and 6.43, with the current reading of 6.43 representing the top of the range. On an exchange basis, insiders at companies that list on the Nasdaq lead the way, with an Eight-Week Sell/Buy Ratio of 7.39 compared to 5.36 on the NYSE. Based on the recent chart for the Nasdaq Composite, we'd say these insiders got it right when they became cautious a few months ago.