Monday Morning Market Insights: Last Week in Review with Rusty Vanneman, Vol. 13

Happy Monday!  If you’re still alive in your NCAA bracket, hope you picked Gonzaga—they look tough. 

The Markets in Review

Thanks to an incredibly strong close last Friday, the primary TV benchmarks (S&P 500, Dow Jones, NASDAQ) ended up last week with a small gain, though more cyclical/small cap fare closed with a loss of just over 1%. 

The S&P 500 closed the week at a new all-time high on a closing basis. The average stock in the overall U.S. market is now up 16% on the year. The S&P 500 is up 6%. The Nasdaq is up 6% YTD.  

Entering the week, the U.S. market is up 58% over the last year (at one point last week, at the one-year anniversary of the bear market low from March 2020, the year-over-year gain was nearly 85%).  Small caps are up 85% over that same time frame. 

These one-year returns from last week were impressive. To put it into context, here are some numbers from BeSpoke Investments:

  • For the S&P 500, its one-year gain was the strongest since the 1930s. 
  • For the Nasdaq 100, its one -year gain was its strongest since the Dot Com bubble. 
  • For the Russell 2,000, its one-year gain was its strongest ever dating back to the index’s beginning in the late 1970s.

Market Pressure

Pressure on the market last week came from a handful of places: 

  • Month/quarter-end related index selling 
  • Global COVID reopening and rising infection concerns 
  • Economic data not surprising to the upside like it once was (even GDPNow is now moving lower on expected 1Q GDP Growth)
  • Finally, the market is technically “overbought.”  In other words, the market has had some strong quick price gains. It could use a pause to refresh.  

There were positives for the market last week, though.  First, interest rates finally went down. The 10-year Treasury dropped to 1.67% from 1.74% the week before, the first weekly drop in rates in some time. 

Another plus for the markets, of course, is the pace of vaccinations. As of March 28, more than half a billion vaccinations (505 million) have been administered across 140 countries, at the rate of approximately 12.7 million/day. That includes 137 million doses in the US, or more than 2.6 million per day*. President Biden said that the goal is now to distribute 200 million vaccines in his first 100 days in office. I had my first vaccination this weekend—what an impressive operation. Efficient and friendly. 

Yet another plus for the market, and especially the financial sector, is that the FOMC loosened restrictions on banks from distributing dividends.

Of course, there were many notable news events last week: a stuck ship in the Suez canal (it has since been freed), a hedge fund missing margin calls putting pressure on Chinese stocks, automakers such as Ford, Jeep, and Dodge closing plants due to chip shortages.

Economic data last week was mixed. Good consumer confidence (biggest jump in 8 years) and manufacturing data (PMIs) surprised to the upside.  A bunch of numbers surprised to the downside, though. Harsh weather from the polar vortex in February did have an impact on some economic data. 

Looking Ahead

Lots of data to watch this coming week. The big number is Friday’s non-farm payroll. Look for a HUGE number of new jobs as the economy continues to open. The unemployment rate is expected to drop from 6.2% to 6.0%. Given the stock market is closed Friday and doesn’t have a chance to immediately react to that data, it generally means that all else being equal, many stock traders will reduce risk going into the long Easter weekend. 

Have a great week! For more insights and commentary, visit our Financial Advisor Success Hub.

 

1059-OPS-03/29/2021

*https://ourworldindata.org/covid-vaccinations 

 

The CFA is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit www.cfainstitute.org.

 

The CMT Program demonstrates mastery of a core body of knowledge of investment risk in portfolio management. The Chartered Market Technician® (CMT) designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide. To learn more about the CMT, visit https://cmtassociation.org/.

About Rusty Vanneman
Rusty Vanneman serves as the Chief Investment Strategist for Orion Advisor Solutions. An industry veteran with more than 30 years of investment experience, Rusty creates relevant market- and platform-related content that supports deeper, more engaging conversations with advisors and investors, educating key internal and external audiences on Orion Portfolio Solutions’ strategies and resources to help deliver favorable investor outcomes, and helps identify new investment offerings to meet growing marketplace demand. Rusty is a host of Orion’s The Weighing Machine podcast and authored the book “Higher Calling: A Guide to Helping Investors Achieve Their Goals.” Rusty has also managed multiple mutual funds and hedge funds during his career and was named one of the Top 10 Portfolio Managers to Watch by Money Management Executive in 2017. Prior to Orion’s acquisition of Brinker Capital in 2020, Rusty was the Chief Investment Officer for Orion Advisor Solutions and prior to that was the President and Chief Investment Officer of CLS Investments. Before joining Orion in 2012, Rusty served as the Chief Investment Officer and Managing Director for a multi-billion-dollar registered investment advisor (Kobren Insight Management) in the greater Boston area. His 11-year tenure at the RIA included a five-year span when the firm was owned by E*TRADE Financial where he also served as the Senior Market Strategist for E*TRADE Capital. Prior, Rusty was a Senior Analyst at Fidelity Management and Research (FMR Co) in Boston. Additional work experience includes Thomson Reuters, General Electric, and as a cattle ranch hand in the Nebraska Sand Hills. Rusty received his Bachelor of Science in Management from Babson College in Wellesley, Massachusetts, where he graduated with high distinction. He holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute. He is also a Chartered Market Technician® (CMT) and is a member of the Market Technician’s Association (MTA).