The Bottom Line
● Global equities rallied on the week, led by small cap stocks and those in value and cyclically‐natured sectors. The S&P 500, Dow Jones Industrial Average and Russell 2000 Index all set new records during the week.
● The recently battered Information Technology and other growth sectors rebounded to help lift the Nasdaq Composite out of correction territory with a healthy +3%weekly gain, but it came with some very bumpy trading.
● Economic data showed that the stubborn labor market may be turning a corner, with the trend in the painfully high level of weekly initial jobless claims improving more than expected and job openings unexpectedly increasing.
Treasury Yields cause Tech Tension
Global stocks posted solid weekly gains but it came with some vey choppy sessions as the tug‐of‐war between rising Treasury yields and growth‐oriented stocks, particularly those in the technology sector, persisted. The S&P 500, Dow and Russell 2000 all set new records during the week, buoyed by optimism of an economic recovery and additional stimulus from the passage of the $1.9 trillion fiscal relief package on Thursday. The Russell 2000 small cap index was the star with a +7.3% gain, but the rotation into value and cyclically‐natured sectors helped the mega‐cap Dow Jones Industrial Average set a new high every day of the week and cross the 32,000 level for the first time. The Nasdaq Composite index, which is dominated by growth and technology companies, dug itself out of correction territory with a +3.1% gain. A more concentrated version of that index is the Nasdaq 100, and its recent performance highlights the volatility rising yields has caused. The index has moved at least 1%, either up or down, in 8 of March’s 10 trading days which hasn’t happened since last March at the depths of the pandemic. On Monday it fell ‐2.9% and then rose +4.0% on Tuesday before ultimately ending the week down ‐0.9%.
Digits & Did You Knows
THE WHAT BILL? — $123 billion, or about 7%, is the amount of the $1.9 trillion coronavirus relief bill that would be directed toward Covid‐19 treatment, with testing and contact tracing making up the largest share of that policy section. In comparison, aid to states and local governments totals $360 billion (source: The Wall Street Journal).
WHAT A COMEBACK — Many American employers have recovered and as of 2/28/21 they have hired back 67% of the 25.4 million jobs that were lost last year during the 2 months of March‐April 2020. The trend continued this week with jobless claims at the lowest in four months and job openings unexpectedly increasing (source: DOL, BTN Research).
Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
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