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Weekly Market Commentary – 4/30/2021

-Darren Leavitt, CFA

It was a hectic week on Wall Street highlighted by large-cap technology Q1 earnings, the April Federal Reserve Open Market Committee, and a busy economic data calendar.  Trading was mixed throughout the week and in the end yielded flat to down results for the major averages.  The S&P 500 finished the week flat while the Dow fell 0.5%, the Nasdaq gave up 0.4%, and the Russell 2000 lost 0.2%.  The yield curve steepened with the 2-year note yield increasing one basis point to close at 0.16% and the 10-year bond yield increasing by six basis points closing at 1.63%.  Gold prices fell $10.20 to $1767.90 an Oz.  The energy complex was strong over the week with WTI trading up $1.36 to close at 63.51 a barrel.

Earnings continued to roll in hot.  Technology garnered most of last week’s earnings action, and the numbers did not disappoint.  Tech heavyweights frankly blew away estimates.  As has been the case for most of this earnings season, companies have been outpacing earnings estimates only to see their stock prices fall after the announced results.  Market expectations coming into earnings were high, and as a result, we have seen tepid and rotational trade over the last few weeks.  The markets may be at an inflection point here, and it appears that continued consolidation may be warranted before the markets can move higher.

The April Federal Reserve meeting was as expected.  There was no change to the policy rate that sits between 0 and 0.25%.  J Powell also reiterated that the current pace of asset purchases would continue for the foreseeable future at 120 billion dollars a month.  While employment numbers have been improving, the Chair reminded investors that we are still far off from the employment figures that we saw pre-pandemic. While we have seen some prices increase, portending some inflation, he still believes many of these price increases are transitory.

Q1 GDP increased to a 6.4% annualized rate just below the consensus of 6.5% but still is a strong result.  Personal income soared, up 21.1% in the month on the back of the stimulus checks that hit individual’s bank accounts recently.  April Consumer Confidence came in at 121.7 versus the consensus estimate of 115 and reflected the optimism of the global economy opening back up again.  Initial Jobless Claims came in at 553, slightly higher than had been expected.  Continuing Claims continued to fall, coming in at 3.60 million, down from the prior week’s reading of 3.65 million.

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