The Bottom Line
● The S&P 500 and Dow Jones Industrial Average both ended the week at new record highs. The gains came as markets got hotter‐than‐expected data on producer price inflation, and as Treasuries came under pressure, with yields paring back from recent highs.
● Following eight straight weeks of increases, the yield on the 10‐year U.S. Treasury bond fell one basis point each of the last two weeks, ending Friday at 1.66%.
● Economic activity in the services sector continued to improve from the pandemic as seen by the March ISM Non‐Manufacturing Index (NMI), which easily beat expectations and surged to a record high of 63.7.
Another week brings more records
The S&P 500 and Dow Jones Industrial Average surged to records to begin the week on strong services PMI data and finished the week at record highs supported by signs of continued economic momentum. Minutes from the March Federal Open Market Committees (FOMC) meeting highlighted an economic outlook that had brightened considerably since January. More and more states are lifting COVID restrictions, including California which plans to lift most restrictions by mid June if hospitalization rates remain stable and vaccine supplies remain plentiful. The flurry of record highs has helped push down volatility, with the CBOE Volatility Index (VIX) falling to 16.7, the lowest level since February 2020, and has been under the 20 threshold for eight straight trading days. Unlike the advances in much of the first quarter, the recent market gains have seen strength in technology stocks that have regained some footing as yields have taken a pause from their ascent. After rising for eight consecutive weeks, the 10‐year U.S. Treasury yield has backed off a bit over the last two weeks. The U.S. dollar also pulled back on the week and oil prices were lower as well.
Digits & Did You Knows
STOCKS — In the last 30 years, the best 12‐month performance for the S&P 500 occurred over the 1‐year period that ended last Wednesday 3/31/21. The S&P 500 gained +56.4% (total return including dividends) from 3/31/20 to 3/31/21 (source: Bloomberg, BTN Research).
BONDS —Long‐dated Treasuries lost ‐15.80% (total return) over the 1‐year ending 3/31/21, the second largest 1‐year loss ever for the Bloomberg Barclays Long U.S. Treasury Bond Index, which includes all Treasury securities with a remaining maturity of at least 10 years and having at least $250 million of outstanding face value. The largest loss was ‐15.83% on 3/31/80 (source: Bloomberg, 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.
Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
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