Winthrop Partners Market and Economic Update 5-17-2021

The Markets (as of market close May 14, 2021)

Tech and growth shares fell last Monday, as inflation worries drove stocks lower and commodity prices higher. The Dow (0.2%) and the Global Dow (0.5%) advanced, while the Russell 2000 and the Nasdaq each fell 2.6%. The S&P 500 lost 0.7%. Treasury yields and the dollar gained. Crude oil prices dipped. Among the market sectors, information technology was the hardest hit, decreasing 2.5%, followed by consumer discretionary (-2.0%) and communication services (-1.9%). Utilities (1.0%) and consumer staples (0.8%) fared best.

Stocks slid for a second consecutive day last Tuesday, pulled lower by falling energy, financial, and industrial shares. The Global Dow lost 1.6%, the Dow fell 1.4%, the S&P 500 dipped 0.9%, and the Russell 2000 dropped 0.3%. The Nasdaq finished essentially unchanged. Treasury yields climbed 1.4%, crude oil prices rose 0.8%, and the dollar was mixed. Only materials gained ground among the sectors. Much of the market movement of late seems to be driven by wavering sentiment over whether inflationary pressures are about to ratchet up. Another concern centers around labor shortages as the economy reopens, which could cause supply-chain disruptions.

Equities sank last Wednesday as a higher-than-expected Consumer Price Index for April (see below) again raised concerns of mounting inflationary pressure. The Russell 2000 lost 3.4%, the Nasdaq dropped 2.7%, the S&P 500 fell 2.1%, the Dow lost 2.0%, and the Global Dow decreased 1.2%. Treasury yields rose, with the yields on 10-year Treasuries advancing 4.4%. Crude oil prices and the dollar increased. Energy was unchanged, while the remaining sectors declined, with communication services, consumer discretionary, industrials, information technology, materials, real estate, and utilities each falling at least 2.0%.

Last Thursday saw stocks rebound, ending a three-day decline. The Russell 2000 led the advance, climbing 1.7%, followed by the Dow (1.3%), the S&P 500 (1.2%), the Nasdaq (0.7%), and the Global Dow (0.1%). Treasury yields, crude oil prices, and the dollar fell. Industrials and financials each advanced 1.9%, closely followed by utilities (1.8%), as each of the market sectors rose except energy, which fell 1.4%.

Last Thursday’s rebound carried over to Friday on a surge in energy and information technology shares. The Nasdaq jumped 2.3%, followed by the Russell 2000 (2.5%), the Global Dow (1.5%), the S&P 500 (1.5%), and the Dow (1.1%). The yield on 10-year Treasuries dropped, the dollar slipped, and crude oil prices advanced.

Despite a late-week rally, stocks weren’t able to recover from the losses suffered earlier in the week. Each of the benchmark indexes listed here fell, led by the Nasdaq, which dropped 2.3%, and the Russell 2000, which slid 2.1%. Investor confidence on a continued economic recovery supported by Federal Reserve stimulus has been shaken recently. April saw both consumer and producer prices continue to climb higher than forecast, and jobless claims are declining. While some investors opine that the surge in inflation is a reaction to the reopening of the economy, many others are concerned that inflationary pressures may persist. Among the market sectors, only consumer staples, materials, and financials added value. Crude oil prices continued to climb, advancing 1.0% last week and 35.0% since the beginning of January.

The national average retail price for regular gasoline was $2.961 per gallon on May 10, $0.071 per gallon more than the prior week’s price and $1.110 higher than a year ago. U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ended May 7, which was 223,000 barrels per day more than the previous week’s average. Refineries operated at 86.1% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day, up from the prior week’s average of 9.1 million barrels per day. Click here for full article: Winthrop Partners Market and Economic Update 5-17-21