- Stocks Mostly Lower
Equity indices were mostly lower last week amid month-end rebalancing even as economic data continued to point toward an accelerating recovery. Data released Thursday showed U.S. first quarter gross domestic product (GDP) expanded at a 6.4% annualized pace (the strongest 1Q growth rate since 1984) while claims for state unemployment insurance benefits fell last week to a fresh pandemic-era low.
- S&P 500 Inches Higher
For the week, the S&P 500 rose 0.02%, while the Dow Industrials fell 0.50% and the tech-heavy Nasdaq Composite declined 0.38%. Mid-sized growth-oriented companies underperformed most last week, with the Russell Mid Cap Growth Index retreating 1.68%.
- Core Inflation Still Below 2% Fed Target
Wall Street was relieved that the Fed’s closely watched inflation measures were not as high as feared, with personal consumption expenditures (PCE) prices rising 0.5% in March and 2.3% Y/Y, while ex-food & energy core prices rose 0.4% and are up 1.8% from a year ago.
- Energy Performs Best
Eight of the S&P 500’s 11 major sector groups posted gains last week, led by Energy (+3.64%), Communication Services (+2.88%) and Financials (+2.44%). Materials rose the least (+0.03%), while Technology (-2.11%) and Healthcare (-1.90%) fell the most.
- Treasurys Yields Climb
Treasury prices declined last week as Fed policymakers re-confirmed their accommodative stance on rates and pledged to keep the current level of monthly asset purchases in place as long as necessary. The benchmark yield climbed to a two-week high, rising over seven basis points to 1.63%. The U.S. Dollar Index gained 0.46% after weakening 0.76% the week prior. U.S. WTI crude oil futures rose $1.44 (+2.3%) to end the week and month at $63.58/barrel.
- The rebound from last year’s economic shutdown remains strong through the first quarter of this year. Real GDP growth was 6.4% annualized in the first quarter. Although growth was narrowly below expectations (6.5%), it was the strongest first quarter for the economy since 1984. Total economic output is less than 1% below the pre-pandemic GDP peak and there is a realistic path for the economy to grow above the prior peak by the end of the second quarter.
This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.
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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.
The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.
The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.
The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.
The Bloomberg Barclays US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.
The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.
The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.
The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.
The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.
The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.
The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.
The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.
The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.