Market Perspective for April 11, 2021

The Nasdaq gained 3.12 percent last week, the S&P 500 Index 2.71 percent and the Dow Jones Industrial Average 1.95 percent. The Russell 2000 Index dipped 0.46 percent as energy weighed on small-cap and value indexes. The S&P 500 posted its third positive trading week in a row, the index’s longest weekly rally since last October, as did the Dow.

SPDR Technology (XLK) gained 3.45 percent as large-cap technology companies won the week. SPDR Consumer Discretionary (XLY) climbed 2.18 percent. It was aided by a 5.58 percent rally in Amazon (AMZN) as it defeated a unionization vote in Alabama.

Large-cap technology companies’ stock closed up on Friday, as SPDR Technology (XLK) gained 0.96 percent and Invesco QQQ Trust (QQQ) 0.64 percent. After posting new intraday records the day before, Friday ended with increases for Microsoft (MSFT) shares of 1.03 percent and Alphabet (GOOGL) 0.90 percent. Apple (APPL) shares were also up 2.02 percent.

The Dow’s new high was boosted by UnitedHealth (UNH) shares rising 3.1 percent and Honeywell (HON) shares 3.2 percent on Friday.

SPDR Consumer Staples (XLP) lost 0.17 percent on Friday. SPDR Healthcare (XLV) rose 1.1 percent on the day.

The financial sector saw a bump from Friday’s bond yield and inflation upticks. SPDR Financial (XLF) rose 0.86 percent for the day. JPMorgan Chase (JPM) shares increased 0.75 percent.

Services PMIs came in much stronger than forecast. The ISM Services PMI hit 63.7 percent, far above the 55.3 percent reading in February and higher than the 59.2 percent consensus forecast.

Job openings increased to 7.4 million in February, up from 7.1 million in January and more than the 7.0 million estimate.

Initial jobless claims remained above 700,000 this week. Continuing claims were 3.73 million for the week ended March 27, barely changed from the week prior. Economists believe the $300 unemployment bonus passed in the last stimulus is keeping claims high as some workers find it more lucrative to collect unemployment than to work.

Producer prices spiked 1.0 percent in March, well above the 0.4 percent forecast. A substantial portion of the rise was driven by higher energy prices. Although this annualizes to double-digit inflation, the Federal Reserve believes this is a transitory caused by supply chain disruptions and not an accelerating rise in prices.

The Fed has an argument with West Texas Intermediate crude trading down to $59.32 per barrel last week, down from the early March high of $67.50 per barrel. Headline inflation numbers should peak next month because last April was when oil fell to single-digits (and below zero for traders holding futures contract into settlement). Crude is currently up 300 percent from where it finished April last year, but it is only up slightly from the pre-lockdown price.

The U.S. Dollar Index dipped 0.57 percent over the past week. That helped developed markets with iShares MSCI EAFE (EFA) rising 0.71 percent. Emerging markets continued their struggles though and iShares MSCI Emerging Markets (EEM) dipped 0.88 percent.

Silver futures dipped 1.02 percent down to $25.33 on Friday. Gold futures tracked back up over the day for a 0.8 percent gain at $1,744.80 an ounce by Friday.

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