Weekly Market Update
May 17, 2021
Market Data as of Week Ending: 5/14/2021 unless noted otherwise

U.S. stock prices declined again last week as inflation concerns continued to weigh on investor sentiment. Earnings season is nearing an end as 91% of companies in the S&P 500 have reported results. The first quarter earnings growth rate for the S&P 500 has surpassed 50%, which is more than double the estimated 23.8% at the end of the first quarter. Small and mid-sized companies generally lagged larger company peers and value stocks outperformed their growth counterparts. Consumer staples, materials, and financials were the best performing sectors, while consumer discretionary and information technology lagged. Developed foreign stocks in Europe and Asia narrowly outperformed U.S stocks while Emerging Market stocks lagged both developed foreign and U.S. markets.

U.S. Treasury yields increased after the Labor Department reported that core (excluding food and energy) consumer prices jumped by 0.9% in April – the largest monthly gain since 1982. The 10-year Treasury yield ended the week at 1.63%. All bond segments were in negative territory for the week but short-term investment grade corporate bonds were the best performing segment while long government bonds lagged. Investment grade corporate bonds ended the week yielding nearly 2.2% and high yield corporate bonds are yielding over 4.3%.

Economic data was headlined by the Labor Department’s inflation report that showed a significant jump in consumer prices during the month of April. Consensus estimates were already forecasting a higher than normal reading of 3.6% compared to last year, but the headline consumer price index (CPI) came in much higher than expected at 4.2% over the past 12 months. The monthly retail sales report showed no change for the month of April and the weekly unemployment claims dropped to 473,000. Economic data in Japan improved as spending accelerated to more than 6% year over year, despite a recent jump in coronavirus infection rates and a new state of emergency in certain regions of the country.