Market Update – April 10, 2021

Investors continued to exhibit faith in the economic recovery as U.S. stocks finished higher this week. Both the S&P 500 Index and the Dow Jones Industrial Average again set new record highs, fueled by March economic data showing the fastest recorded growth in U.S. service industries and better than expected employment figures. A record $372 billion flowed into global equity funds in the first quarter of 2021; a trend that shows little sign of slowing down.

For the week, the S&P 500 Index finished up 2.7%, while the Dow Jones Industrial Average rose 2.0%. Year to date, the S&P is up 9.9%; the Dow has gained 10.4%. More than 900,000 jobs were added to the U.S. workforce in March, exceeding expectations, while the unemployment rate fell to 6.0%. In a positive sign, the labor force participation rate ticked up to 61.5%; however, this is still below pre-pandemic level. Further evidence that the labor force will require more time to heal came from weekly unemployment data. First-time unemployment claims increased slightly to 744,000 and continuing claims fell marginally to 3.7 million.

Markets are also reacting favorably to the current pace of vaccinations, as the seven-day average of daily doses administered in the U.S. exceeded three million this week. At this rate, 75% of the adult U.S. population could be inoculated by the end of July. Worldwide, more than 725 million doses have been administered in 154 countries. Although significant progress has been made in combating COVID-19, higher infection rates have cropped up in certain areas, including our home state of Michigan.

Inflationary signals ticked up as the U.S. Producer Price Index rose more in March than forecast. As higher costs for businesses to produce goods and services can be passed on to end consumers, we’ll closely monitor next week’s U.S. Consumer Price Index for any change. While reported 2021 inflation numbers could look elevated when compared to numbers from last year’s pandemic depths, we continue to believe that although short-term inflation may move higher as a result, increased longer-term inflation is unlikely until the remaining slack in GDP growth and the labor market disappears.

Tax planning is a widely discussed topic during this time of year. Although the IRS recently moved the personal tax filing deadline to May 17, we encourage you to reach out to your Wealth Advisor to discuss tax strategies for 2021. Please check out our 2021 tax guide to review useful information on tax rates, deductions, credits and deadlines. We also encourage you to review our article on understanding cybersecurity threats during tax season. As always, please contact us with any questions. We are here for you every step of the way.