Markets “In a Nutshell” for April 12, 2021
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 1.95%, the S&P 500 rose 2.71%, the New York Stock Exchange Composite (2,000 stocks) rose 1.30% and the average investors index (Value Line Index) was up 0.85%. Foreign stocks (DJ Global ex U.S.) were up 1.14%. Bond prices were higher for the week, with the 10-year U.S. Treasury ending the week 5 basis points lower at 1.67%. (Data source: Wall Street Journal)
Stocks Soar as Bonds Stabilize
Stocks rose broadly for the week following the impressive March jobs report from the previous Friday and continue to look unstoppable as bond yields have stabilized, with the 10 year seemingly stuck at 1.70% for the moment. One piece of negative news was a second consecutive week of increasing initial unemployment jobless claims that continues to hold back the labor economy and shed light on just how difficult a full economic recovery will be. For perspective on just how high initial jobless claims remain, even though they have fallen precipitously from a year ago, the past week’s amount of workers filing for unemployment was still higher than any single week during the Great Financial Crisis. While this is only a single economic data point and doesn’t tell the whole story on an economy that is clearly booming from the depths of a year ago, it does cloud the, what seems like, unanimous opinion that economy is going to continue rising unabated for the indefinite future. (Barron’s)
Tax Increase Proposals
More details are coming out on a weekly basis on the proposed tax increases that the Biden administration would like to implement and increasingly look targeted at the country’s largest corporations. Treasury Secretary Janet Yellen proposed last week that there should be a global minimum tax rate that U.S. companies should pay to negate the benefit of moving cash and operations overseas. In a reining in of tax hike proposals, Senator Joe Manchin of West Virginia, who has seen his political power grow significantly by being the most moderate Democrat in an evenly split Senate, suggested that he would only support raising the corporate tax rate to 25% from 21%, instead of the currently proposed 28%. All of these proposals would certainly have significant effects on the stock market, but recent weeks have shown that markets have turned a complete blind eye to these tax developments, but that won’t last forever if these proposals become more concrete. (Barron’s)
What is the International Monetary Fund’s new estimated growth rate for the global economy for 2021? (Scroll Down for Answer)
Have a Great Week!
4. The IMF is now expecting a global economic growth rate of 6%, the highest projection since 1980 (Barron’s).