Loading...

Patton Wealth Management, Inc.- Market Commentary for the week ending April 1st 2021

Form CRS
  Reports

  • /
  • Blog
  • The Economy Picks Up Momentum
03 April, 2021 Market Commentary

The Economy Picks Up Momentum


- President, Patton Fund Management, Inc.

ALL BLOG CONTENT IS FOR INFORMATIONAL PURPOSES ONLY. ANY REFERENCE TO OR MENTION OF INDIVIDUAL STOCKS, INDEXES, OR OTHER SECURITIES ARE NOT RECOMMENDATIONS AND ARE SPECIFICALLY NOT REFERENCED AS PAST RECOMMENDATIONS OF PATTON WEALTH ADVISORS. ALL GRAPHS, CHARTS, AND TABLES ARE PROVIDED FOR ILLUSTRATION PURPOSES ONLY. EXPRESSIONS OF OPINION ARE ALSO NOT RECOMMENDATIONS AND ARE SUBJECT TO CHANGE WITHOUT NOTICE IN REACTION TO SHIFTING MARKET, ECONOMIC, OR POLITICAL CONDITIONS.  IT IS COMMON FOR US TO USE A FUND AS A PROXY FOR AN INDEX OR ASSET CLASS.  FOR MORE DETAILS SEE OUR FULL DISCLOSURE HERE.

Market Commentary for the week ending April 3rd, 2021

Summary

  • The March employment report and others show the U.S. economy is strong and picking up momentum.
  • Stocks around the world closed higher with the S&P 500 reaching a record high.
  • The yield on the 10-Year U.S. Treasury Bond continued to rise as inflation fears persist.

 

This Week’s Performance Highlights

Market Indexes week ending April 1, 2021

Source: www.YCharts.com

  • Stocks were higher around the world with the U.S. markets posting some of the stronger gains. At the close of the shortened holiday week, large U.S. stocks were up +1.2% as measured by the S&P 500 reaching an all-time record high and topping 4,000 for the first time.
  • The tech-heavy NASDAQ Composite outperformed the S&P 500 by more than double closing the week up +2.6%. Although it was a big week for the index it remains below its mid-February record high by -4.4% and behind the S&P 500 year-to-date as illustrated in the accompanying graph.

    S&P and Nasdaq composite year to date performance

    Source:www.YCharts.com

  • Small U.S. stocks had a welcomed rally gaining +1.4% for the week after 2 weeks of relatively rough performance when they underperformed most other stocks.
  • There were 4 sectors declining for the week but all were just fractional losses. The technology sector was the biggest gainer up +2.1% helped by some of the largest of stocks as illustrated in the accompanying table.

    Large stock leaders

    Source:www.YCharts.com

  • International stocks were higher as with developed markets up +0.3%. The performance was mixed from region to region with Japanese stocks down -1.4% while Eurozone markets gained +1.6% helped by strength in such countries as Germany rallying +2.2%.
  • Emerging markets climbed +1.1% for the week helped by the largest, China, up +1.7%. Turkey’s market posted a notable +3.4% jump following a collapse the week before on news of changes in leadership at the country’s central bank.
  • The alternative asset classes were mixed with real estate stocks gaining +0.7%, gold off -0.2%, and commodities unchanged.
  • Bond prices were flat overall for the week but the yield on the 10-year U.S. Treasury continued to climb closing higher on Friday after the strong report on the employment picture in the U.S.

Interesting Numbers

-29.7%

During all of 2020, in spite of the pandemic and surging unemployment, bankruptcy filing in the U.S. fell by -29.7% as reported by the United States Courts. The declines were most significant in the early months of the pandemic as courts provided limited access to the public. Government stimulus is credited for this overall trend although bankruptcy filings can lag behind economic conditions. 2020’s numbers are the lowest since 1986.

+23.7%

Used car prices have surged +23.7% since March 2020 according to an extensive analysis representing once of the biggest surges since data collection began more than 25 years ago. Pickup trucks have seen the biggest jump up +43.1% in price while the price of smaller compact cars have risen just +10.5%. A decrease in the use of public transportation and some supply issues with new cars are driving this trend.

Manheim used vehicle value index

Source: https://publish.manheim.com/en/services/consulting/used-vehicle-value-index.html

Economic Indicators

+916,000 Jobs

The U.S. economy created 916,000 new jobs in March following a disappointing February that was impacted by a wave of COVID cases following the holidays and rough weather. In addition to this March report topping economists’ forecasts, the numbers for both January and February were revised higher by a combined 156,000.

The jobs growth was widespread with every sector but one reporting gains. The biggest gain was in the leisure and hospitality sector adding 280,000 jobs as businesses staff up for what is expected to be pent up demand from consumers wanting to get out to eat and travel. The government, in particular state and local governments, as well as the construction industry were two other big gainers.

The labor force, or those people either employed or actively seeking employment, increased by 350,000 in what is another good sign of strength. In spite of this meaningful increase, the labor force remains down 3.9 million people from pre-pandemic levels.

Economists expect the jobs growth to continue in the coming months if most Americans get vaccinated and the number of COVID cases continue to fade.

+11.2% Year-over-Year

Home prices continue to rise at a near record pace with the S&P CoreLogic Case-Shiller national price index up +11.2% during the past year. This is an acceleration from the month before and the biggest increase in nearly 15 years. The biggest gains were in Phoenix, up +15.8% year-over-year, followed by Seattle and San Diego. Cleveland was one of the few cities experiencing a price drop.

Although the year-over-year gains are very big, there are signs that the momentum is slowing as gains in the most recently months have been smaller than before. This is arguably being impacted by slightly higher mortgage rates but a tight supply in the housing inventory could keep prices moving higher.

109.7 vs. 90.4

Consumer Confidence is the strongest since before the pandemic with the Consumer Confidence Index jumping to 109.7 compared to just 90.4 the month before. Consumer views of both the current economy and what they expect 6 months from now were sharply higher all helped by the strong jobs market and government stimulus checks. One notable concern is about higher inflation, mainly at the gas pump, that could temper some spending.

Upcoming Economic Reports

  • Producer Price Index
  • Factory Orders
  • Initial Jobless Claims

Contact Mark A. Patton :

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Any specific securities or investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own situation before making any investment decision including whether to retain an investment adviser.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions.  Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. This content was created as of the specific date indicated and reflects the author’s views as of that date. Supporting documentation for any claims or statistical information is available upon request.

Past performance is no guarantee of future results.  Any comments about the performance of securities, markets, or indexes and any opinions presented are not to be viewed as indicators of future performance.

Investing involves risk including loss of principal.

Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. For more information on specific indexes please see full disclosure here.

Any charts, tables, forecasts, etc. contained herein are for illustrative purposes only, may be based upon proprietary research, and are developed through analysis of historical public data.

All corporate names shown above are for illustrative purposes only and are NOT recommendations.

International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Lower-rated securities are subject to greater credit risk, default risk, and liquidity risk.

View All Articles x