Archive for ND&S Updates

ND&S Weekly Commentary 4.12.21 – S&P 500 and DJIA Reach New Highs

April 12, 2021 

The S&P 500 and DJIA closed at record levels last week supported by the improving economic recovery and an increasingly successful rollout of the coronavirus vaccines.

Economic data released last week confirmed the improving economic picture. The Institute for Supply Management (ISM) reported their March manufacturing and services index last week with both reports coming in better-than-expected. The services index surged 8.4 percentage points in March to mark an all-time high of 63.7%. The manufacturing index was equally as strong posting 64.7%. Durable goods orders fell 0.8% in February to $505.7 billion missing estimates for a 0.5% decrease. The Producer Price Index (PPI) showed final demand for goods and services increased 1.0% in March. The PPI measures price changes from the producer’s perspective which offers a different vantage-point on inflation pressures.

For the week, the S&P 500 and DJIA were up 2.76% and 1.99%, respectively. The Nasdaq rebounded on the strength of the technology sector to close higher by 3.13%. Small company stocks, represented by the Russell 2000, cooled off to close 0.46% lower. International markets were mixed last week with the developed markets (MSCI EAFE) increasing 2.01% and emerging markets (MSCI EM) lower by 0.34%. The rise in treasury yields moderated last week as the 10yr U.S. Treasury yield had a slight decline of 2bps to close at 1.67%. Gold prices closed at $1,741/oz. – up 0.97% on the week. Oil prices closed at $59.32/bbl – down 3.47% last week.

First-quarter earnings season begins this week with a number of major banks scheduled to report results Wednesday before the bell. With earnings season, we will return to market fundamentals and also gain deeper insight into how individual companies are navigating the reopening. Equity markets posted a strong first quarter and are at least partially discounting strong economic conditions ahead. We continue to suggest investors stay close to long-term asset allocation targets.

Congratulations to Lee Elder and Hideki Matsuyama. Elder, was the first African-American to play the Masters Tournament in 1975. He was joined by Jack Nicklaus and Gary Player as honorary starters for the 85th edition of the Masters Tournament. Hideki Matsuyama, made history on Sunday as the first male golfer from Japan to win one of golf’s major championships.

“I always said that if they have a course like this in heaven, I want to be the head pro.” – Gary Player

Weekly Commentary (04/05/21) – Markets Advance on Massive Infrastructure Plan

April 5, 2021 

Equity markets closed near all-time highs last week as investors cheered President Biden’s $2 trillion (yes, trillion) infrastructure plan along with another round of stimulus money.

For the week, the DJIA advanced 0.24% while the S&P 500 gained 1.14%. The tech-heavy Nasdaq jumped 2.60%. International markets were strong as the MSCI EAFE index (developed markets) closed higher by 0.53% while emerging market equities (MSCI EM) jumped higher by 2.40%. Small company stocks, represented by the Russell 2000, finished ahead by 1.46% for the week. Fixed income, represented by the Bloomberg/Barclays Aggregate, finished the week lower as the yield curve continued to steepen. As a result, the 10 YR US Treasury closed at a yield of 1.69% (up ~6 bps from the previous week’s closing yield of ~1.63%). Gold prices closed at $1,726.50/oz – down 0.33% on the week. Oil prices closed at $61.45/bbl (up 0.79% on the week).

Economic news released last week was mixed, but the big news came on Friday when the Labor Department reported that 916,000 jobs were added in March – far surpassing estimates for a gain of 647,000 jobs. The strong jobs report will likely boost equity markets in the short-term. Economic releases in the week ahead include Durable Goods, JOLTS job openings and Producer Price Index (PPI).

Economic and market fundamentals remain quite reasonable, and the news on the vaccine front continues to be encouraging. Markets will likely turn their attention to the details of the massive infrastructure plan and how the Biden administration plans to pay for the plan. Of course, the burden will fall to taxpayers, and the first proposed major tax increase announced by the Biden team pushes corporate taxes up 33% – from 21% to 28%.

We suggest investors stay close to their long-term target asset allocations (stay underweight fixed income and be market weighted to slightly higher-than market weight in equities). Let’s make it a good week!

“Success is never final, failure is never fatal. It’s courage that counts.” – John Wooden