- Stocks were positive across the board last week. We saw global markets (represented by the MSCI All Country World Index) up 1.4% and domestic stocks (represented by the S&P 500 Index) up 1.2%. It was U.S. small companies leading the pack for the week, posting a 2.5% return (represented by the Russell 2000 Index).
- Below are figures for the month of May and year-to-date through the end of May:
|*as of 5/31/2021||May||YTD|
|MSCI All Country World Index (Global Stocks)||1.5%||10.8%|
|S&P 500 Index (U.S. Large Companies)||0.7%||12.6%|
|Russell 2000 Index (U.S. Small Companies)||0.2%||15.3%|
|MSCI EAFE (International Developed Stocks)||3.6%||10.4%|
|MSCI Emerging Markets (International Emerging Stocks)||1.2%||6.0%|
|Barclays U.S. Aggregate Bond Index||0.3%||-2.3%|
|Barclays Municipal Bond Index||0.3%||0.8%|
- In terms of what has been driving markets at a sector level, it has been energy (39.2% YTD), financials (29.5% YTD), and materials (20.9% YTD). That’s a clear reversal of the past couple of years, where technology and communication services drove returns.
- The Commerce Department released its personal consumption expenditure price index on Friday, which stated an increase of 3.1% in its core reading (which leaves out food and energy prices). This is the reading that the Federal Reserve prefers with regard to inflation measurements. Issues with supply chains and pent-up demand continue to be the driving force behind these short-term price increases.
- Oil prices have risen above $67 per barrel for the first time since October 2018.
- In the coming week, all eyes will be on Friday’s jobs report to see any progress (or lack of) in the unemployment rate.
- The strong earnings results of Q1 not only topped many first-quarter expectations but also caused many to revise their expectations for the rest of the year. According to FactSet, Q1 earnings rose 50% above a year ago and analysts now expect 34% earnings growth for 2021. While the past few quarters have been focused on recovery, the pace of growth for the rest of the year signals a strengthening global economy.
- I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.