Weekly Economic Update – April 5, 2021

Weekly Economic Update – April 5, 2021

In this week’s recap: Markets react positively to infrastructure proposals; S&P 500 rises above 4,000 for the first time.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, LCC, April 5, 2021


THE WEEK ON WALL STREET

Overcoming a rocky start, stocks rallied into the close of a holiday-shortened week of trading as technology shares staged a powerful recovery and investors reacted positively to President Biden’s infrastructure spending proposal.

The Dow Jones Industrial Average gained 0.24%, while the Standard & Poor’s 500 picked up 1.14%. The tech-heavy Nasdaq Composite index rose 2.60%. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.43%.1,2,3

S&P 500 Hits 4,000

Monday opened with two banks reporting they face losses due to the default of a small U.S. hedge fund. That news, combined with rising yields, higher new cases of COVID-19, and a public warning of new virus variants, started the week off on an unsettled note.4

Despite the shaky start, upbeat economic reports helped spark a rally that was paced by gains in the technology sector.  The market also reacted positively on Wednesday to the introduction of a $1.9 trillion infrastructure proposal.

Stocks closed out the week with an exclamation mark, with the S&P 500 Index closing above 4,000 for the first time.5

 

Hedge Fund Woes

Last week’s trading opened on news that a U.S.-based investor was forced to unwind positions in multiple Chinese technology companies and American media holdings.

A number of large banks saw their share prices fall early in the week, reflecting concerns about their exposure to the hedge fund losses. Meanwhile, investors grappled with whether this was a one-off event or the opening act for additional hedge fund issues. As the week wore on, it appeared the hedge-fund issues were an isolated event.4


T I P   O F   T H E   W E E K

As you retire, look at the changes in your expenses. Will your mortgage soon be paid off? What business-related expenses will disappear, and what new expenses will emerge? This may matter greatly in your retirement strategy.


THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: Factory Orders.

Tuesday: Job Openings and Labor Turnover Survey (JOLTS).

Wednesday: Federal Open Market Committee (FOMC) Minutes.

Thursday: Jobless Claims.

Source: Econoday, April 1, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Paychex, Inc. (PAYX).

Thursday: Constellation Brands (STZ), Conagra Brands (CAG).

Source: Zacks, April 1, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


Q U O T E   O F   T H E   W E E K

“The fool doth think he is wise, but the wise man knows himself to be a fool.”

WILLIAM SHAKESPEARE



 T H E   W E E K L Y   R I D D L E

What can be seen in the middle of March and April, that can’t be seen in the beginning or end of either month?

 

LAST WEEK’S RIDDLE: Christine likes grapes but not potatoes. She likes squash but not lettuce, and peas but not onions. Following the same rule, will she like pumpkins or apples?

ANSWER: Pumpkins. Christine only likes things that grow on vines.


Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2021 FMG Suite.

CITATIONS:

  1. The Wall Street Journal, April 1, 2021
  2. The Wall Street Journal, April 1, 2021
  3. The Wall Street Journal, April 1, 2021
  4. Fortune.com, March 29, 2021
  5. CNBC, April 1, 2021
Weekly Economic Update – April 5, 2021

Weekly Economic Update – March 29, 2021

In this week’s recap: Weakness in tech and high-growth stocks leads to a rocky week; Yellen and Powell signal optimism.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, LLC, March 29, 2021


THE WEEK ON WALL STREET

A rocky week with wide price swings led to mixed results for stocks last week, as investors grappled with anxieties over economic growth and weakness in technology and other high-growth stocks.

The Dow Jones Industrial Average added 1.36%, while the Standard & Poor’s 500 gained 1.57%. The Nasdaq Composite index fell 0.58% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 1.67%.1,2,3

 

Stocks Churn

After a promising start to the week, stocks turned negative on mounting concerns about economic growth in Europe, with broad losses in energy, cyclicals, and technology.

Though bond yields backed off their highs and Secretary of the Treasury Janet Yellen and Fed Chair Jerome Powell both struck an optimistic tone on the economy, stocks posted back-to-back losses on Tuesday and Wednesday.

Thursday trading was emblematic of the week’s volatile action. The S&P 500 dropped nearly one percent earlier in the day following Powell’s comment about the Fed eventually rolling back its bond purchase program, then rallied to close with a 0.5% gain.4

Stocks rallied into the Friday close, pushing the Dow and S&P 500 into positive territory and paring the losses on the Nasdaq Composite.

 

Tech Remains Under Pressure

The losses in technology and other high-growth stocks in recent weeks have largely been attributed to the sharp and rapid rise in bond yields.

So, it was both interesting and a bit confounding that last week saw yields pull back, and rather than helping support these companies’ stock prices, many technology stocks continued to decline. The failure to rally on lower yields may be pointing to other reasons for their price weakness. Some are concerned about current prices, and believe there may be better growth opportunities in more fairly-valued companies. The “fear of missing out” that propelled investors to pile into these stocks over the last twelve months appears to have moderated.


T I P   O F   T H E   W E E K

If you are expecting a child, take a moment to calculate the amount left on your mortgage and to roughly estimate the future cost of his or her college education. Besides defining some financial goals, this may also help you determine how much life insurance you should consider.


THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Consumer Confidence.

Wednesday: ADP (Automated Data Processing) Employment Report.

Thursday: Jobless Claims. ISM (Institute for Supply Management) Manufacturing Index.

Friday: Employment Situation Report.

Source: Econoday, March 26, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Lululemon Athletica (LULU), Chewy, Inc. (CHWY).

Wednesday: Micron Technology, Inc. (MU), Walgreens Boots Alliance (WBA).

Thursday: Carmax, Inc. (KMX).

Source: Zacks, March 26, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


Q U O T E   O F   T H E   W E E K

“Those who dream by day are cognizant of many things which escape those who dream only by night.”

EDGAR ALLEN POE



T H E   W E E K L Y   R I D D L E

Christine likes grapes but not potatoes. She likes squash but not lettuce, and peas but not onions. Following the same rule, will she like pumpkins or apples?

 

LAST WEEK’S RIDDLE: I have no heart or mind, but I do have two legs. Yet they only touch the ground when I am not carrying things around. What am I?

ANSWER: A wheelbarrow.


Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2021 FMG Suite.

CITATIONS:

  1. The Wall Street Journal, March 26, 2021
  2. The Wall Street Journal, March 26, 2021
  3. The Wall Street Journal, March 26, 2021
  4. CNBC, March 25, 2021
Weekly Economic Update – April 5, 2021

Weekly Economic Update – March 22, 2021

In this week’s recap: A week of ups and downs leaves modest losses at week’s end.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, LLC, March 22, 2021


THE WEEK ON WALL STREET

Rising bond yields and improving economic conditions led to a choppy week of trading that ended in modest losses for investors.

The Dow Jones Industrial Average fell 0.46%, while the Standard & Poor’s 500 declined 0.77%. The Nasdaq Composite index lost 0.79% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 1.24%.1,2,3

Rising Yields

The stock market began the week on a positive note, rising on optimism over the economic reopenings and a decline in bond yields. Technology shares staged a strong turnaround from the previous week.

Following the FOMC (Federal Open Market Committee) meeting announcement reaffirming the Fed’s easy-money policies, the Dow Industrials and the S&P 500 recorded new record closing highs.4

Markets reversed themselves on Thursday as a surge in yields sent technology and other high-growth stocks lower. During the session, the 10-year Treasury yield moved above 1.75% (the highest in 14 months), and the 30-year Treasury breached 2.5% for the first time since August 2019.5

Stocks closed out the week mixed as technology reclaimed some of the previous day’s losses.

The Fed Stands Pat

The Fed restated its commitment to no interest rate hikes through 2023. As expected, the FOMC also voted to continue its monthly bond purchases of at least $120 billion.

FOMC members projected that the economy would grow 6.5% this year, a sharp improvement over its previous estimate of a 4.2% gain. The forecast for the unemployment rate by year-end is 4.5%, down from the current rate of 6.2%. While Fed Chair Powell said that he anticipates inflation rising this year, he expects price increases to be temporary, with inflation staying within the Fed’s 2% target for the next several years.6


T I P   O F   T H E   W E E K

If you are 60 now, there is a reasonable chance that you may live into your eighties or nineties. So, with longevity in mind, prepare for retirement with wealth accumulation and wealth protection in mind.


 

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: Existing Home Sales.

Tuesday: New Home Sales.

Wednesday: Durable Goods Orders. Purchasing Managers’ Index (PMI) Composite Flash.

Thursday: Gross Domestic Product (GDP). Jobless Claims.

Friday: Consumer Sentiment.

Source: Econoday, March 19, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Adobe, Inc. (ADBE), Gamestop Corporation (GME).

Wednesday: General Mills (GIS).

Thursday: Darden Restaurants, Inc. (DRI).

Source: Zacks, March 19, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


Q U O T E   O F   T H E   W E E K

“It is good to have an end to journey toward; but it is the journey that matters, in the end.”

URSULA K. LE GUIN



T H E   W E E K L Y   R I D D L E

I have no heart or mind, but I do have two legs. Yet they only touch the ground when I am not carrying things around. What am I?

 

LAST WEEK’S RIDDLE: Where does today come before yesterday?

ANSWER: In the dictionary.


Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2021 FMG Suite.

CITATIONS:

  1. The Wall Street Journal, March 19, 2021
  2. The Wall Street Journal, March 19, 2021
  3. The Wall Street Journal, March 19, 2021
  4. CNBC, March 17, 2021
  5. CNBC, March 18, 2021
  6. CNBC, March 17, 2021
Weekly Economic Update – April 5, 2021

Weekly Economic Update – March 15, 2021

In this week’s recap: The White House signs COVID-19 fiscal relief bill into law; the economy reacted positively.

Weekly Economic Update

Presented by Cornerstone Financial Advsory, LLC, March 15, 2021


THE WEEK ON WALL STREET

Stocks touched new record highs last week as bond yields steadied, a fiscal relief bill was signed into law, and confidence in a strong economic recovery grew.

The Dow Jones Industrial Average gained 4.07%, while the Standard & Poor’s 500 tacked on 2.64%. The Nasdaq Composite index rose 3.09% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.01%.1,2,3

Dow 32,000

Stocks marched higher as bond yields leveled off and the $1.9 trillion stimulus bill moved through the legislative process. A muted inflation number and a better-than-expected jobless claims report evidenced an improving economy absent an attendant rise in inflation.4

The technology sector was particularly volatile, with the NASDAQ Composite falling into correction territory to start the week as investors rotated into cyclical opportunities.

Technology rebounded strongly as bond yields stabilized and bargain hunters purchased tech names at reduced prices. The bounceback propelled the S&P 500 to a record high, while the reopening trade drove the Dow Industrials above 32,000 for the first time.5,6

The week ended on a mixed note, with the Dow and S&P 500 adding to their record closes and the NASDAQ Composite trimming its weekly gain.

Treasury Auctions

Treasury auctions to finance federal spending are usually staid affairs, but investor trepidation was high ahead of last week’s auctions of 10-year and 30-year Treasuries. Investors were concerned that lukewarm demand amid a huge supply had the potential to drive yields higher and take the pressure on stock prices lower.

As it turned out, Wednesday’s auction of 10-year Notes was received with adequate demand, helped by a tame February inflation number and strong overseas interest. The following day’s 30-year auction also went relatively smoothly, though the auction yield was 36.2 basis points higher than last month’s auction. Despite $120 billion of federal debt issuance last week, yields steadied, easing investors’ interest rate concerns for the moment.7


 

T I P   O F   T H E   W E E K

While scholarships are offered to students, no one offers a scholarship for retirement. Consider putting your own retirement before any college plans.


 THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Retail Sales. Industrial Production.

Wednesday: Housing Starts. Federal Open Market Committee (FOMC) Meeting Announcement.

Thursday: Jobless Claims. Index of Leading Economic Indicators.

Source: Econoday, March 12, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Coupa Software (COUP).

Wednesday: Five Below (FIVE), Cintas Corporation (CTAS).

Thursday: FedEx Corporation (FDX), Nike, Inc. (NKE), Dollar General (DG).

Source: Zacks, March 12, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


 

Q U O T E   O F   T H E   W E E K

“The secret of being boring is to say everything.”

VOLTAIRE


 


T H E   W E E K L Y   R I D D L E

Where does today come before yesterday?

 

LAST WEEK’S RIDDLE: The name of a particular insect is six letters long. You can lop off the last three letters from its name and end up with the name of another insect. What is this six-letter word?

ANSWER: Beetle.


 Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2021 FMG Suite.

CITATIONS:

  1. The Wall Street Journal, March 12, 2021
  2. The Wall Street Journal, March 12, 2021
  3. The Wall Street Journal, March 12, 2021
  4. Bloomberg.com, March 10, 2021
  5. CNBC, March 11, 2021
  6. The Wall Street Journal, March 10, 2021
  7. The Street, March 11, 2021
Weekly Economic Update – April 5, 2021

Weekly Economic Update – March 8, 2021

In this week’s recap: Stocks have a mixed reaction to rising bond yields and increasing inflation.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, LLC, March 8, 2021


THE WEEK ON WALL STREET

Stocks were mixed last week as rising bond yields and heightening inflation fears sent stocks on a wild ride, capped by a remarkable Friday afternoon rally.

The Dow Jones Industrial Average gained 1.82%, while the Standard & Poor’s 500 increased by 0.81%. The Nasdaq Composite index fell 2.06% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.76%.1,2,3

Rising Yields Whipsaw Stocks

The week began on an ebullient note as stocks surged on a retreat in bond yields and approval of a new vaccine, with sharp gains in reopening stocks, hard-hit technology companies, and small-cap companies.

But the optimism proved fleeting as worries over rising bond yields upended the high valuation growth stocks and sent the broader market lower. Deteriorating investor sentiment culminated in a steep sell-off on Thursday, sparked by comments from Fed Chair Jerome Powell that did little to allay investors’ concerns about rising yields and festering inflation anxieties.4

Stock prices rallied on a strong employment report on Friday, but some of the enthusiasm was tempered by rising yields.

U.S. Dollar’s Surprising Strength

Last week, the U.S dollar gained 0.93% against a basket of international currencies—a relatively big move in the currency market. Year-to-date the dollar has appreciated over 2%.5

U.S. dollar strength this year has defied the expectations of many analysts who anticipated that a global economic recovery would prompt a shift away from the safe harbor of the dollar toward non-dollar denominated assets.

However, rising U.S. yields and a faltering economic rebound in Europe have instead propelled the U.S. dollar higher, raising concerns about tight financial conditions abroad and its potential adverse impact on an emerging markets recovery.


T I P   O F   T H E   W E E K

New parents can sometimes spend a little too much on cute and trendy stuff. Here’s a test: will the item improve the quality of care for your baby? If not, leave it at the store.


 THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: Consumer Price Index (CPI).

Thursday: Jobless Claims. Job Openings and Labor Turnover Survey (JOLTS).

Friday: Consumer Sentiment.

Source: Econoday, March 5, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Wednesday: Campbell Soup Company (CPB).

Thursday: JD.com (JD), Ulta Beauty, Inc. (ULTA), Docusign (DOCU), GoodRx Holdings (GDRX).

Source: Zacks, March 5, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


Q U O T E   O F   T H E   W E E K

“Pleasure may come from illusion, but happiness can come only of reality.”

SEBASTIEN-ROCH NICOLAS DE CHAMFORT


T H E   W E E K L Y   R I D D L E

The name of a particular insect is six letters long. You can lop off the last three letters from its name and end up with the name of another insect. What is this six-letter word?

 

LAST WEEK’S RIDDLE: A woman walking along a canal sees a boat full of people, yet there isn’t a single person on board. How could this be?

ANSWER: Everyone on board is married or partnered (not single).


 Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2021 FMG Suite.

CITATIONS:

  1. The Wall Street Journal, March 5, 2021
  2. The Wall Street Journal, March 5, 2021
  3. The Wall Street Journal, March 5, 2021
  4. The Wall Street Journal, March 4, 2021
  5. The Wall Street Journal, March 5, 2021
Weekly Economic Update – April 5, 2021

Weekly Economic Update – March 1, 2021

In this week’s recap: Rising bond yields deliver a blow to stocks; Fed Chair affirms commitment to current money policy.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, LLC, March 1, 2021


THE WEEK ON WALL STREET

Stocks dropped amid rising long-term bond yields, with sharp declines in high-valuation growth stocks leading the overall market lower.

The Dow Jones Industrial Average slipped 1.78%, while the Standard & Poor’s 500 declined 2.45%. The Nasdaq Composite index, home to many high-valuation growth plays, fell 4.92% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged up 0.37%.1,2,3

 

Rising Rates Derail Stocks

The 10-year Treasury yield climbed last week, from 1.34% to 1.42%, sending shudders through the stock market. While investors generally understand that economic strength may lead to higher bond yields, it was the speed at which bond yields rose that proved unsettling. Generally, when yields rise, bond prices tend to fall.4

Rising yields also drove sector rotation, with economic reopening stocks (e.g., energy, financials, and industrials) outperforming stay-at-home stocks, especially many of the big technology names.

The trend of higher yields was mitigated by testimony on Tuesday and Wednesday by Fed Chair Jerome Powell. He provided some assurances that the Fed remained committed to its current easy money policy stance.5

A surge in yields on Thursday, however, sparked a new wave of anxiety and a broad retreat that left market averages lower for the week.

 

Powell Testimony Calms Investors

Concerns over rising long-term bond yields and inflationary pressures were eased by two days of testimony by Fed Chair Powell. Powell reiterated the Fed’s intention to stick with its near-zero short-term interest rate policy and monthly bond purchase program until the labor market fully recovers and its inflation goals are met.

Powell dismissed market fears of accelerating inflation, noting that he did not see inflation reaching any troubling levels, declaring that any increase would be modest and transitory. He added that the Fed would likely allow inflation to spend some time above its 2% target rate. Inflation for the past eight years straight has been below that target.5


T I P   O F   T H E   W E E K

If marriage gives you a new last name, be sure to notify Social Security, your bank, and the investment and insurance companies with whom you have accounts and policies about the name change.


 THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: Institute for Supply Management (ISM) Manufacturing Index.

Wednesday: Automated Data Processing (ADP) Employment Report. Institute for Supply Management (ISM) Services Index.

Thursday: Jobless Claims. Factory Orders.

Friday: Employment Situation Report.

Source: Econoday, February 26, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Zoom Video Communications, Inc. (ZM).

Tuesday: Target (TGT), Ross Stores, Inc. (ROST).

Wednesday: Okta, Inc. (OKTA), Marvell Technology Group (MRVL), Dollar Tree, Inc. (DLTR).

Thursday: Broadcom, Inc. (AVGO), Costco Wholesale Corp. (COST), Kroger (KR).

Source: Zacks, February 26, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


Q U O T E   O F   T H E   W E E K

“Chance favors only the prepared mind.”

LOUIS PASTEUR


T H E   W E E K L Y   R I D D L E

A woman walking along a canal sees a boat full of people, yet there isn’t a single person on board. How could this be?

 

LAST WEEK’S RIDDLE: What appears once in a minute, twice in a moment, but never in a decade?

ANSWER: The letter M.


 Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2021 FMG Suite.

CITATIONS:

  1. The Wall Street Journal, February 26, 2021
  2. The Wall Street Journal, February 26, 2021
  3. The Wall Street Journal, February 26, 2021
  4. U.S. Department of the Treasury, February 26, 2021
  5. The Wall Street Journal, February 24, 2021