Weekly Snapshot April 20th, 2021
Market Review: Week Ending 4/16/2021
Good economic news, rising consumer demand, and strong corporate earnings rallied the equity markets with the Dow Jones Industrial Average (DJIA) surpassing 34,000 for the first time. For the week, The Dow Jones Industrial Average (DJIA) advanced 1.18%, the S&P500 Index (S&P500) gained 1.37%, the Russell 2000 Index (R2000) increased 0.86%, and the NASDAQ Composite (NASDAQ) improved 1.61%1 Year-to-date, the DJIA has returned 11.74%, S&P500 11.43%, NASDAQ 9.03%, and R2000 14.51%.2 S&P 500 sector outperformers for the week were Utilities +3.66%, Materials +3.24%, and Healthcare +2.88 while sector underperformers were Communication Services -0.01%, Energy +0.23%, and Industrials +0.59%.3 For the fourth week in a row, market volatility as measured by the CBOE Volatility Index (VIX) continued to fall. At 16.3, the VIX is at low levels not seen in 14 months.4
A reopening economy with Fiscal stimulus and an accommodative Federal Reserve continue to push revenue and earnings growth higher than last year’s levels. Earnings season for the 1st Quarter of 2021 started strong led by the banks and other financial companies. Even though actual earnings topped estimates by over 30% on average for the banks reporting, the average one-day return following their releases were flat to slightly negative showing how high expectations are following the market rally.5
Economic data continues to show strength with March retail sales jumping 9.8% and weekly unemployment claims falling to 576,000 – the lowest level since the pandemic began. However, the debate on inflation and its transitory nature continues. The Consumer Price Index jumping 0.6% in March. This level was higher than forecasted and on an annual basis – inflation at 2.6% – is on pace for the highest level in two and a half years6. Despite these inflation numbers, the recent yield stabilization trend continued. Yields on the 10-year U.S. Treasury bond fell to 1.57% down from the recent high of 1.74%.
WHAT WE WILL BE WATCHING THIS WEEK
- Industrial and Services PMIs.
- The Conference Board’s Leading Economic Index for the U.S.
- National Association of Realtors – Existing home sales.
- Corporate earnings led by Proctor & Gamble, Johnson & Johnson, Verizon, Honeywell.
- Movement and discussions on the potential Infrastructure Bill in Congress.
STOCKS IN THE NEWS
- Although trading lower, JPMorgan Chase reported strong revenues and earnings for the 1st quarter of 2021. Revenues of $33.1 Billion topped expectations by $2.6 Billion and earnings of $3.31 per share were $0.21 better than estimates. Although benefits of an improving economy and recovery in consumer and corporate spending could be seen, the markets discounted the earnings beat driven by credit reserves. In addition, loan growth was problematic.
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
Christopher A. Silipigno, ChFC® – Investment Committee
Christopher G. King – Investment Committee
Timothy J. Shumsky – Investment Committee
1 FactSet – 4/16/2021
2 T. Rowe Price – 4/16/2021
3 FactSet – 4/16//2021
4 John Hancock – 4/16/2021
5 Edward Jones – 4//16/2021
6 John Hancock – 4/16/2021A
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