June 21-25, 2021 Recap
Infrastructure Plans Boost Optimism
From Worst to Best
U.S. equities rebounded last week with the S&P 500 transitioning from its worst week since January to its best week since February. Risk-on equity buying was driven by optimism surrounding President Joe Biden’s endorsement over a bipartisan Congressional infrastructure spending deal that should be additive to the pace of economic recovery. Meanwhile, in testimony before Congress, Fed Chairman Powell again played down run-away inflation fears, saying he has a level of confidence that prices will eventually come down, and it would be “very, very unlikely” for a repeat of 1970s-style inflation.
For the Week…
The S&P 500 rallied 2.76% last week, the Dow Industrials surged 3.44% and the tech-heavy Nasdaq Composite advanced 2.36%. The small cap-focused Russell 2000 outperformed, gaining 4.33% with small cap growth performing best, up 4.54% versus a 4.14% gain on small cap value.
Consumer Spending Plateaus
Household spending was unchanged last month (+0.4% expected). April consumer spending was however upwardly revised to a 0.9% increase (from +0.5%) on a combination of increased savings and rising vaccinations, amid a reopening economy. Consumer spending has overtaken pre-pandemic levels and suggests that 2Q GDP will be very strong.
Broad-Based Gains
All 11 major sector groups within the S&P 500 posted gains last week, with Energy (+6.66%) back in headliner status as best weekly performer. Financials (+5.28%) and Industrials (+3.05%) followed as next-best gainers. Consumer Staples (+1.94%), Real Estate (+1.33%) and Utilities (+0.66%) rose the least. With 2021 nearly half over, Energy (+49.44%) and Financials (+26.51%) are up the most year-to-date.
Treasury Prices Ease, Yields Rise
Benchmark 10-year Treasury yields rose last week to end at 1.54% on Friday as expectations continue to be range-bound within a 1.35% to 1.59% range for the next several weeks. The U.S. Dollar Index weakened by 0.41% last week and U.S. WTI crude oil futures gained 1%.
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