Weekly Snapshot March 19th, 2021
Market Review: Week Ending 3/19/2021
The continued rise in bond yields and sudden drop in oil prices halted last week’s rally in U.S. equities. The Dow Jones Industrial Average (DJIA) was down 0.46% for the week. The S&P500 Index (S&P500) fell 0.77%, the NASDAQ Composite (NASDAQ) off 0.79%, and the Russell 2000 Index (R2000) falling the most at 2.77%.1 Despite this week’s pullback, investors’ expectations of volatility moved lower. The CBOE Volatility Index closed at 19.2 – the lowest level in 13 months.2 Year-to-date, the DJIA has returned 6.60%, S&P500 4.18%, NASDAQ 2.54% and R2000 15.76%.3
The Federal Reserve raised both its economic and inflation forecasts but continued to stress patience and accommodation. The 10-year U.S. Treasury yield pushed through 1.70% reaching pre-pandemic levels of January 2020. The rising and steepening yield curve aided financial stocks until Friday when the Federal Reserve announced that it was not extending an exemption that allowed banks to hold lower capital reserves because of the pandemic. Although a short-term negative, it reflects the Federal Reserve’s view that the economy has made a substantial recovery.
On the economic front, oil prices had their biggest drop (8.0%) since last summer breaking below $60 per barrel as rising inventories and lockdowns in Europe spooked the commodity. Weekly jobless claims rose unexpectedly to 770,000. Industrial production fell 2.3% in February versus consensus expectations for a slight increase, while an index of homebuilder sentiment fell to a seven-month low as housing starts and permits also saw declines. Retail sales slumped 2.7% in February, the biggest decline since last April’s 15.2% plunge.4
WHAT WE WILL BE WATCHING THIS WEEK
Various economic reports on the health and direction of the economy:
- National Association of Realtors – Existing homes sales
- U.S. Dept. of Labor – Weekly unemployment claims
- U.S. Census Bureau – Durable goods
- U.S. Bureau of Econ Analysis – Personal Income
As always, we appreciate your confidence in our team.
Fundamentum Investment Committee
John Nichol, CFA® – Chief Investment Officer
Trevor Forbes – Investment Committee
Robert Armagno – Investment Committee
Matt Dunn, CFA® – Chief Compliance Officer
Sources:
1 FactSet – 3/19/2021
2 John Hancock – 3/19/2021
3 T.Rowe Price – 3/19/2021
4 T.Rowe Price – 3/19/2021
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Investment advice offered through Fundamentum LLC a registered investment advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the investment objective of any investment strategy will be attained. Investing involves risk including loss of principal. Past performance is no guarantee of future performance. All indices are unmanaged and may not be invested into directly.
