A recap of Q1 2021 shows major carnage in some areas of the market but March ended being a positive month for equities. The Dow led the way surging nearly 7%, but the S&P 500 also remained strong, gaining more than 4.5%. Technology was an area of weakness and the Nasdaq 100 was up just 1.71%. This week saw tech back in favor after a first quarter where cyclical and value plays dominated. The jobs report released yesterday blew past consensus estimates, with nonfarm payrolls rising 916K in March. The jobless rate dipped to 6% from 6.2% That bodes well for further strong performance in recovery stocks. But, the bond market continues to be under pressure as interest rates inch up, and yields could still go higher.
Future Wealth’s View
In a reaffirmation of the “reopening trade”, this week’s stock market movement may be a harbinger of things to come. Vaccinations are rolling out en masse, concerts and ball games are set to begin again, people are beginning to make plans for summer travel and most importantly, consumer confidence and spending is set to peak in the coming months. All of that bodes well for investors. Being invested in the market also means paying attention to fundamentals and that is something that will become vitally important as the recent cyclical shift to value from growth potentially reverses itself when consumers begin to resume life as we knew it. While no one can predict when things will completely be back to the way it was before, one sure sign that things are beginning to return to normalcy in America is, unfortunately, the resumption of mass shootings.
It is a fool’s game to try to time the market and many have tried and failed. But, a well thought out strategy of investing for the long term can withstand many of the punches that the market throws at us.