US Equity Markets struggled last week, as Fed Chairman Powell indicated that any inflation would likely be temporary and the Fed would not be raising rates any time soon. Paradoxically, that increased growth and longer-term inflation concerns among investors, causing rates to hit their highest level since before the pandemic and pressuring equities. The S&P 500 dropped 0.8% for the week and is now up 4.2% for the year. The Nasdaq also fell 0.8% for the week to reduce its gains for the year to 2.5%, while the Russell 2000 (small cap stocks) saw greater profit-taking, down 2.8% for the week, though it remains up 15.8% for the year.
Global Equity Markets were mixed last week, as improved vaccine news out of Europe helped offset rising rate concerns elsewhere. On balance, Developed Markets were up 0.5% for the week with European shares outperforming Asian equities. For the year, Developed Markets are now up 4.5%. Emerging Markets fell 0.8% for the week, hurt by a notable pullback in energy prices, but remain up 3.5% for the year.
US Economic Data were largely disappointing last week. After a strong month in January, Retail Sales for February declined 3.0%, much worse than expected. Further, Initial Weekly Jobless claims of 770K rose from the prior week's level of 725K, also worse than projected. On the positive side, some measures of manufacturing for March surged higher.
Of Interest to Us
The dividend yield on the S&P 500 is no longer greater than the yield on the US 10-Year Treasury. Specifically, the dividend yield on the S&P 500 is now 1.48%, while the yield on the 10-Year Treasury is 1.73%. Will this cause some income investors to rotate out of equities into fixed income?
Market Data
for the week ending 3/19/2021
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