ND&S Weekly Commentary (3.29.21) – Volatility Continues – Mixed Bag

March 29, 2021

Stocks ended a volatile week with a late day rally that pushed the S&P 500 and the DJIA to new highs while all other equity markets finished the week lower. Stocks swung during the week as investors weighed signals that the U.S. economy is primed for recovery versus concerns over higher interest rates and higher inflation. The S&P 500 and the DJIA were up 1.7% and 1.4% respectively on Friday and for the week the S&P 500 and DJIA finished up 1.6% and 1.4%. The NASDAQ declined -0.6% last week as tech stocks continued to struggle with higher interest rates. Small U.S. stocks, represented by the Russell 2000, declined -2.88%. The best performing sectors last week were real estate and consumer staples and the worst performing was communications services. International markets were weak as European countries struggle with the vaccine roll out, a stronger U.S. dollar and global supply chain issues caused by the blockage of the Suez Canal. The MSCI EAFE index and the MSCI Emerging Markets index declined -0.5% and -2.1%, respectively. Fixed income markets rose last week as the yield on the 10 year U.S. Treasury declined from 1.74% to 1.67%.

Economic data reported last week came in mostly below analyst estimates. On Monday, the National Association of Realtors reported existing home sales declined 6.6% in February. The results missed expectations but are up a whopping 9.1% from the same time last year. The Commerce Department reported manufactured durable goods fell 1.1% in February, missing expectations of a 0.5% advance. The “second” reading of real Gross Domestic Product (GDP) was increased to 4.3% in the fourth quarter of 2020, outpacing estimates of 4.3%. Jobless claims for the week ended March 20 were 684,000, beating estimates of 735,000. This week in economic news look for reports on consumer confidence, the ISM Mfg. index and the March jobs report.

As the stimulus funds get distributed and the vaccine roll out accelerates, the U.S. economy should continue to improve.

“Here comes the sun, and I say it’s all right.”The Beatles