March 29, 2021

Weekly Market Commentary March 22nd to March 26th 2021

Weekly Initial Jobless Claims fell to 684,000, the lowest level in a year. Continuing claims dropped by -264,000 to 3.87 million for the week ended March 13. Both numbers signal improvement for labor markets as more Americans get vaccinated and states continue to ease restrictions.

Q4 GDP was revised from 4.1% to 4.3%. The upward revision was attributed to inventories which contributed 1.37% to the reading, up from the second estimate contribution of 1.1%. Personal Consumption Expenditures were revised down -0.1% to 2.3%.

Personal Income fell -7.1% credited to a decrease in government social benefits. The number was in line with analysts’ expectations and largely shrugged off by investors that are looking ahead to next month’s report that will include the effects of the most recent stimulus checks.

Consumer Spending declined -1.0% however the previous month’s number was revised from 2.4% to 3.4%. The PCE Index rose 0.2% on the month and was up 1.6% year over year. Core prices (ex food and energy) rose 0.1% for the month. Year over year the index contracted from 1.5% to 1.4% – still well below the Fed’s 2% target.

Durable Goods were down -1.1% on the month, the reading’s first decline since April 2020. Non-Defense Capital Goods Orders ex-aircraft was down -0.8%. The decline was mostly attributed to bad weather in much of the country. Supply constraints also weighed on orders and shipments.

New Home Sales fell almost 20% on the month to a 775,000 annual rate. Compared to this time last year, sales were up 8.2%. Although positive, that is the lowest reading since April of last year. Existing Home Sales also disappointed this month coming in at 6.22 million, a -6.6% drop from last month. Both numbers indicate that housing is cooling, likely a side effect of higher mortgage rates.

The S&P 500 and the Dow Jones Industrial Average rallied on Friday finishing the week up 1.6% and 1.4%, respectively. Energy producers and healthcare companies posted some of the best performances. The tech-heavy NASDAQ trailed behind finishing the week lower by -0.6%. Bond yields fell slightly on the week. The 2-year U.S. Treasury yield finished the week at 0.14% while the 10-year closed at 1.68%. The 30-year ended the week at 2.38%, down from last weeks close of 2.44%.

Next week’s economic releases include Pending Home Sales, Markit and ISM Manufacturing and Employment Numbers.