Markets Mixed – Looking for Direction
The major Stock Market Indexes finished mixed last week, looking for direction. Investors want to know:
- Interest Rates, how high? Is inflation a real concern, or is our Federal Reserve forecast of “transitory” inflation accurate? When rates go higher than anticipated, typically not positive for most stocks, as well as interest-rate sensitive bonds.
- How much longer will we have Covid restrictions here in the United States, as well as traveling abroad and re-entering!? Obviously, restaurants, tourism businesses, and many small businesses are still in dire straits. Restrictions impact spending, which impact profits and stock prices!! I’m not suggesting we should not have restrictions, just the facts of the potential impact to your investments.
- Will the reversing stock trend of Value Stocks leading Growth stocks continue? Value is up double digits and Growth is mostly flat so far in 2021.
- Tax increases and Government Spending. We are anticipating an “Infrastructure” proposal that will include significant tax increases, in several areas from Corporate Tax increases, to families earning over $400,000, a carbon tax, an investment transaction tax, an annual wealth tax, and the list goes on. Not everything thrown at the wall will stick, however we should anticipate tax revenue going up, and simple math suggests something will be going down.
For the week, the Dow and the S&P 500 finished up 1.36% and 1.58% respectively. The Nasdaq dropped (.57%) and the Russell 2000 (2.88%). Over the pond, the major stock indexes were also down.
The 10 Year US Treasury Yield fell slightly to finish the week @ 1.66%.
