Hello, I’m Greg Curvall, Senior Portfolio Manager with Fifth Third Bank.
U.S. equities rose last week and the yield on the 10-year Treasury hit its highest level in more than a year, finishing the week just above 1.6%. While the Nasdaq broke its string of three consecutive weekly losses, it trailed the Dow yet again. The tech-heavy Nasdaq has underperformed the Dow for four straight weeks, a first since 2016. Investors have been rotating out of the growthier tech names, going into value stocks like energy, financials and industrials as interest rates move higher and the economy gets closer to firing on all cylinders.
President Biden’s $1.9 trillion stimulus bill was signed into law on Thursday and checks began going out over the weekend. Expectations remain high that equities are poised to record more gains as the U.S. economy begins to reopen, supported by unprecedented fiscal stimulus, pent up consumer demand and savings, and historically low interest rates.
Following the passage of the Covid relief bill, President Biden is expected to start building support around an infrastructure package that will modernize the country’s antiquated transportation system while creating jobs. Those close to the administration have predicted the bill could come with a $2 trillion price tag. This month, the American Society of Civil Engineers gave the United States a “C-“ rating for the state of its infrastructure. The report found that 45% of Americans lack reliable access to transit services.
The U.S. hit the milestone achievement of administering more than 100 million COVID-19 vaccine shots, with 66 million people now having gotten at least a first dose of the vaccine. Roughly 2.3 million doses are given a day in the United States, a figure that is expected to rise significantly in the coming weeks with the rollout of the Johnson & Johnson one-dose vaccine.
The economic data coming in continues to paint a positive landscape, both for stocks and the overall economy. Small business optimism is on the rise. Core consumer prices rose less than expected in February, implying inflation measures remain muted and job openings rose in January to an almost one-year high, according to the Labor Department's Job Openings and Labor Turnover Survey, or the JOLTS report.
In the week ahead, the Federal Open Market Committee, or FOMC, meets to set monetary policy. Officials are expected to keep rates on hold. This week’s U.S. economic calendar also includes retail sales and industrial production on Tuesday, along with housing starts on Wednesday. February retail sales may have been impacted by the extreme weather conditions that effected much of the U.S. last month.
As always, will be watching and reporting back to you next week. Thank you.