Market Update – March 13, 2021

This week marked the one-year anniversary since the World Health Organization declared the Covid-19 outbreak a pandemic. So much has happened since last March that it often feels like a decade has passed rather than just 12 months. We continue to wish you good health as the world continues to make progress toward ending the pandemic. U.S. stocks rose sharply this week, as the S&P 500 Index and the Dow Jones Industrial Average both touched record highs. The NASDAQ Composite recovered from its recent negative volatility to post a strong gain. Stocks were buoyed by encouraging employment numbers and lower-than-expected inflation data.

For the week, the S&P 500 Index finished up 2.6%, while the Dow Jones Industrial Average rose 4.1%. Year to date, the S&P is up 5.0%; the Dow has gained 7.1%. First-time unemployment claims beat expectations, falling to 712,000, the lowest amount since early November 2020. Continuing claims fell to 4.1 million, continuing a downward trend. However, not all labor segments had positive results – evidenced by the increased number of self-employed and “gig” workers receiving benefits through a federal unemployment program created in response to the pandemic. Although we continue to see some improvement in employment figures, the labor market has a way to go before returning to the job strength of early 2020.

After the House and Senate agreed on details of the latest spending package and secured votes in both chambers for final passage, President Biden signed the America Rescue Plan Act of 2021 into law on Thursday. This immense new round of spending ($1.9 trillion) will likely continue to support rising stock prices, although the markets had already largely priced in the bill’s passage.

Inflation concerns retreated this week, serving up another tailwind to stock prices. Recently, markets seemed to express some concern that the economy was in jeopardy of heating up too quickly, which could in turn lead the Federal Reserve to raise short-term interest rates sooner than expected. However, figures released this week showed that the core Consumer Price Index (CPI) increased only 0.1% month-over-month and 1.3% year-over-year – less than feared. As long as inflation remains relatively tame, the Fed will likely remain in a holding pattern on rates.

As we continue to navigate through the pandemic, our commitment remains to be here for you each step of the way. As always, please contact us with any questions about the economy and your financial plan.

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