Market Data as of Week Ending: 3/12/2021 unless noted otherwise
U.S. stock prices advanced and most of the major benchmarks reached new record levels. Earnings growth estimates for the first quarter rose during the week. According to FactSet, the current estimated earnings growth rate for the S&P 500 is 22.1%. Small and medium sized companies outperformed their large company peers as investor sentiment for a sustained economy recovery takes hold. Value stocks outperformed growth, led by strong gains in the real estate, consumer discretionary, and utilities sectors. All eleven major economic sectors were positive, but an eclectic group of communication services, energy, and health care lagged the broader market. Developed foreign stocks in Europe and Asia outperformed U.S stocks and Emerging Market stocks lagged developed foreign markets.
U.S. Treasury yields advanced this past week as President Biden signed the $1.9 trillion American Rescue Plan Act and the Treasury Department announced that the stimulus payment distribution process would begin over the weekend. High yield corporate bonds were the best performing asset class and shorter duration bonds outperformed. Investment grade corporate bonds ended the week yielding nearly 2.3% and high yield corporate bonds are yielding more than 4.5%.
Economic data released during the week were better than expected as inflation data was muted and the weekly jobless claims dropped to the lowest level since November. The Labor Department reported lower than expected core inflation (excludes food and energy) coming in at 0.1% for the month of February. Weekly initial unemployment claims declined to 712,000 and 4.1 million Americans continue to claim ongoing unemployment benefits. The ECB announced it would accelerate bond purchases in the second quarter and economic growth for the region was revised lower. Europe has lagged the U.S. and the U.K. with vaccine distribution and continues to deal with more draconian coronavirus restrictions.