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Market Insights

Market Update – July 10, 2021

U.S. stock indices experienced volatility during the shortened trading week, falling sharply before rallying on Friday to finish higher. Market gyrations remain prevalent amid concerns about COVID-19 variants (which led Japanese officials to prohibit Olympic spectators) and a potential slowdown in global economic growth in 2022. As always, predicting the future direction of stock and bond prices with certainty is impossible, which is why we focus on asset allocation, diversification, and financial planning to assist in navigating the turbulence.

 For the week, the S&P 500 Index finished up 0.4%, while the Dow Jones Industrial Average advanced 0.2%. Year to date, the S&P is up 16.3%; the Dow has gained 13.9%. Weekly first-time unemployment claims rose slightly to 373,000, while continuing claims fell to 3.34 million, the lowest level since March 2020. We anticipate the continuing claims numbers will decline more substantially in the coming weeks as additional states end enhanced unemployment benefits and larger numbers of people resume searching for jobs.

 Bond prices rallied as expectations for muted future inflation, and economic growth drove yields lower (bond prices and yields typically move in opposite directions). Additionally, money flowing into bonds from investors reducing their stock exposure helped bolster bond prices. Even as some investors trim stock holdings, others seem ready to buy any time there is a slight downturn. (Investors held trillions of dollars in excess savings in cash and money market funds during the pandemic.)

 Commodity prices continued to fluctuate. The oil industry led news this week, as disputes over production levels within member countries in the Organization of the Petroleum Exporting Countries (OPEC) and their allies (e.g. Russia) caused crude prices to whipsaw several times. Oil, like many other commodities, continues to be plagued this year by unresolved supply and demand imbalances brought on by the pandemic.

 Fluctuating markets, divergent projections for economic growth and inflation, commodity prices swinging back and forth – we analyze all of these issues and more to construct durable portfolios to help you achieve your goals and objectives. As always, please contact us with any questions. We are here for you every step of the way.

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