Weekly Snapshot May 24th, 2021
Market Review: Week Ending 5/21/2021
Due to the back and forth between a reopening economy and some disappointing April data points, along with rising inflation concerns, the equity markets were mixed. For the week, the Dow Jones Industrial Average (DJIA), S&P500 Index (S&P500), and Russell 2000 Index (R2000) were all down -0.51%, -0.43%, and -0.42%, respectively. Bucking this trend was the NASDAQ Composite (NASDAQ) which returned +0.31%.1 For the first time in six weeks, NASDAQ outperformed the S&P 500, and the Russell 1000 Growth Index (+0.13%) ended a dry spell by beating the Russell 1000 Value Index (-0.69%).2 Within S&P 500 sectors, outperformers for the week were REITs +0.90%, Healthcare +0.74%, and Utilities +0.31%, while sector underperformers were Energy -2.84%, Industrials -1.70%, and Materials -1.42%.3
The National Association of Realtors (NAR) reported U.S. sales of existing homes for April below the previous month, making it the third straight monthly decline at a time of year when sales typically pick up. Existing home sales dropped 2.7% month-over-month (m/m) in April to an annual rate of 5.85 million units, versus expectations of a slight increase to 6.07 million units.4
Minutes from the Federal Open Market Committee’s (FOMC) meeting in late April were released midweek. FOMC members acknowledged the solid recovery in the economy with some supply-constrained inflation. FOMC members stated inflation could run temporarily above their 2% target due to transitory supply chain bottlenecks but that inflation would fade. The minutes noted that the economy was far from meeting its goals of maximum employment and price stability. However, economists and investors focused on the discussions around asset purchases and the potential to ease the pace of asset purchases if the economy continues to make progress.5
WHAT WE WILL BE WATCHING THIS WEEK
Various economic reports on the health and direction of the economy:
- First-quarter GDP, second estimate – U.S. Bureau of Economic Analysis
- New home sales – U.S. Census Bureau
- Consumer Confidence Index – The Conference Board
- Durable goods orders – U.S. Census Bureau
- University of Michigan Index of Consumer Sentiment
STOCKS IN THE NEWS
- Deere & Company (DE) reported quarterly earnings-per-share of $5.68, above the $4.51 estimate, as net sales of equipment grew 33.7% year-over-year to $11.0 billion, topping the Street’s forecast of $10.6 billion. Management raised its full-year net income and stated performance was solid across its entire business lineup, reflecting healthy worldwide markets for farm and construction equipment.6
- Applied Materials Inc. (AMAT) reported quarterly results with revenue +3.0% above consensus and near the top end of $5.19-5.59B guidance, representing +41.1% year-over-year growth. Earning-per-share of $1.63 was above $1.51 consensus and above the top end of $1.44-1.56 guidance, representing +83.1% year-over-year growth. AMAT also issued earnings and revenue guidance that was above estimates.7
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
Sources:
1 FactSet – 5/21/2021
2 John Hancock – 5/21/2021
3 FactSet – 5/21/2021
4 John Hancock – 5/21/2021
5 T.Rowe Price – 5/21/2021
6 FactSet – 5/21/2021
7 FactSet – 5/21/2021
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