North American equities pushed to new highs but than retreated to finish the week flat. This was amid solid corporate earnings reports, plans for massive additional US Policy stimulus, accelerating economic growth and a renewed pledge by the US Federal Reserve to remain accommodative despite a pick-up in inflation pressures.
Stock markets came under pressure from renewed worries that rising global COVID-19 cases will delay the full recovery of economic activity.
The week kicked off the unofficial start of earnings season with 22 of the S&P 500 companies scheduled to report first-quarter results.
Trading got off to a strong start thanks to the previous week’s monthly payrolls data, which was released when the market was closed for the Good Friday holiday. The Labor Department reported that employers added 916,000 jobs in March, well above consensus estimates of around 650,000, and the most since last August.
The S&P 500 and Dow Jones Industrial Average climbed to record highs after US President Joe Biden unveiled a $2.25 trillion infrastructure investment plan, and the US vaccine rollout continued to surpass targets.
Conflicting signals about progress in fighting the coronavirus appeared to be a major driver of sentiment. However, investors seemed encouraged by AstraZeneca’s release of data showing its vaccine was highly effective and safe in U.S. trials
The week began on a strong note, due to a combination of fiscal and monetary policy stimulus, more retail investor support, and the better economic outlook given progress in containing the coronavirus.
On Thursday, President Biden also signed into law the USD 1.9 trillion American Rescue Plan Act, following its passage in Congress on a party-line vote. Treasury Secretary Janet Yellen stated that direct USD 1,400 payments to most Americans, a key part of the bill, should begin showing up in bank accounts as early as the weekend.
The rise in rates again weighed on growth stocks by increasing the discount on future earnings, while value stocks managed gains.
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ClearWater Market Commentary as of May 10th, 2021
North American equities pushed to new highs but than retreated to finish the week flat. This was amid solid corporate earnings reports, plans for massive additional US Policy stimulus, accelerating economic growth and a renewed pledge by the US Federal Reserve to remain accommodative despite a pick-up in inflation pressures.