Wednesday, April 28, 2021
Top Story
End of recession call may come soon
- Incredibly, the COVID-19 recession may have ended a year ago, but we still don’t have an end-of-recession call from the National Bureau of Economic Research (NBER).
- But we may be a step closer Thursday after the first estimate of Q1 2021 gross domestic product (GDP) is released.
- The delay isn’t surprising, as NBER has waited for an average of 15 months after a recession is over before they’ve made a decision.
- The Q1 numbers are likely to show nearly a full year of strong growth now behind us following the dramatic slowdown of the U.S. economy in March and April 2020.
- For details, see our latest LPL Research blog.
Daily Insights
U.S. stocks open little changed after solid earnings from big technology names
- Investors remain focused on the Federal Reserve (Fed) decision.
- President Joe Biden set to unveil a $1.8 trillion family aid plan funded by higher taxes.
- The 10-year breakeven inflation expectations—measured as the yield difference between nominal Treasuries and inflation-protected bonds—climbed to 2.4%, the highest since 2013.
- European markets are modestly higher in midday trading led by France, which is on track to set a new all-time high.
- Asian stocks were mostly higher overnight with few major drivers as traders await direction from the Fed.
Day 100
- President Biden’s 100th day in office is Thursday and stocks have been very strong so far.
- The Dow is up nearly 10% since the inauguration, which would be the best first 100 days since FDR in the 1930s.
- Don’t forget, stocks also had their best rally ever from Election Day until the inauguration, another sign stocks are comfortable with President Biden.
- Since 1900, the Dow is up more than 10% the first 100 days under Democrats and slightly negative under Republicans.
Technical update
The S&P 500 Index was flat Tuesday, as solid gains in cyclical value sectors were offset by losses in the technology and defensive sectors. The financials sector closed at a record high, and yields across the curve are moving higher this morning ahead of the Federal Open Market Committee (FOMC) announcement today. 10-year Breakevens are also hitting fresh 8-year highs, something that has been correlated with small caps outperforming large.
COVID-19 news
The United States reported 58,000 new COVID-19 cases on Tuesday, slightly above the seven-day average, however, the trend remains firmly lower as vaccination rates continue to increase (source: New York Times).
- The Centers for Disease Control and Prevention (CDC) now reports nearly 40% of the adult population in the U.S. has been fully vaccinated, with roughly 55% of adults receiving at least one dose of the vaccine.
- India remains the global hotspot, with daily new cases topping 350,000 as the nation struggles to grapple with outbreaks.
Is All The Good News Priced In?
Investors are appropriately optimistic, given the backdrop of a dramatically improving economy, the rapid pace of vaccinations, massive levels of fiscal and monetary stimulus, and surging earnings. Learn more in this week’s Weekly Market Commentary.
Let’s Talk About Valuations
On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discuss why stocks might not be as expensive as many think and how the economy continues to improve faster than expected.
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