Markets “In a Nutshell” for March 22, 2021
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was down 0.46%, the S&P 500 fell 0.77%, the New York Stock Exchange Composite (2,000 stocks) fell 0.97% and the average investors index (Value Line Index) was down 1.40%. Foreign stocks (DJ Global ex U.S.) were up 0.82%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 10 basis points higher at 1.74%. (Data source: Wall Street Journal)
Stocks Fall in Volatile Week
Stocks fell after a rollercoaster week that started with a record high on Monday and then fell throughout the week despite the Federal Reserve reiterating its accommodative stance towards financial markets. In the end, yields’ relentless rise higher is putting an unexpected amount of pressure on stocks that are sensitive to higher borrowing costs, just as the economy begins to truly gain some momentum. One sign of optimism for consumer behavior was the 1.36 million airport passengers on March 14th last week, reaching the highest amount of airline travelers for a single day since March 2020. On the other hand, Europe hit a major roadblock last week with its vaccine rollout as the use of the AstraZeneca vaccine was halted during the week as a result of worries that the inoculation was causing health complications, though European Medicine Agency concluded later in the week that there was no link between the reported health issues and the vaccine. (Barron’s)
Taxes and Infrastructure
On the heels of the $1.9 trillion stimulus bill, the Biden administration has quickly moved on to talks of a potential infrastructure bill, that would likely add another significant amount to the national debt that has skyrocketed since the beginning of the pandemic. While the general idea of an infrastructure bill has been a rare example of bipartisan support in recent years, the amount to actually spend on various infrastructure projects, where that money is spent and how it will be paid for have stopped any discussions in their tracks. The Biden administration laid out its general plans for raising taxes on corporations and the highest earning individuals as a way finance some portion of any potential bill, but this only sparked the beginning of the fierce, but expected debate on raising taxes and potential damage given the current state that the economy is in. (Barron’s)
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As of last Friday, what has been best performing sector in the S&P 500 for the year so far? (Scroll Down for Answer)
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2. Energy has been the best performing sector in the S&P 500 so far for 2021, returning 30.92% for the year after falling almost 34% in 2020. (Morningstar).