Wednesday, April 7, 2021
Record surge in Purchasing Managers’ Index surveys
U.S. businesses are looking to escape from underneath the shadow of COVID-19, and the Institute of Supply Management’s (ISM) Purchasing Managers’ Index (PMI) surveys may be suggesting they already have. An expanding vaccine program, fiscal stimulus, and further reopening have combined to push the ISM manufacturing and services PMI’s to their highest levels of the 21st century. We take a closer look at the PMI data in today’s LPL Research blog, available at 12p.m. ET.
U.S. stocks are little changed after Tuesday’s quiet session
- European stocks are mixed in midday trading with the United Kingdom outperforming as the country rolls out use of the Moderna vaccine.
- Asian markets were also mixed overnight with Hong Kong and China underperforming.
Interesting quarter, extraordinary year
The first quarter of 2021 is well in the rearview mirror now, but it’s still worth noting some highlights:
- The prior four quarters saw the best performance for stocks (S&P 500 Index) versus bonds (Bloomberg Barclays Aggregate Bond Index) since the inception of the broad bond benchmark in the mid-1970s.
- The spread between stocks and bonds in the first quarter wasn’t as strong, but still wide enough to be in the top 15% of all quarters over the same time period.
- Looking back to 1980, the performance of the Russell 3000 Value Index compared to its growth counterpart was the fourth widest of any quarter, trailing only the period after the tech bubble burst.
- We expect stocks to continue to outperform bonds, but at historical rather than record levels. Our views on value and growth remain balanced despite the strong quarter, with a bias toward value as the economy continues to recover.
Technical update Stocks took a breather following Monday’s record high for the S&P 500 Index, and that action is continuing this morning with major indexes little changed. Interest rates are suggesting that much of the recent positive economic data was already priced in—the 5 and 10-year yields both sit 11 basis points lower than recent highs, while the 30-year yield has pulled back 20 bps since mid-March.
The United States reported 62,000 new COVID-19 cases on Tuesday, unchanged on a week over week basis (source: New York Times), though Easter-related distortions could be present in the data.
- While the B117 variant remains a primary concern, early indications are that the expansion of the vaccine rollout has offset the upward pressure on cases.
- As of April 6, nearly one third of the U.S. population has received at least one dose of the vaccine (source: CDC), while over three-quarters of the population aged 65 or older has received at least one dose. https://www.cdc.gov/coronavirus/2019-ncov/index.html
- United Kingdom has begun its rollout of the Moderna vaccine while the European Medicines Agency plans to give its assessment of the safety of the AstraZeneca vaccine.
LPL Research revises previous forecasts to better reflect the growing optimism of an economy on the rebound. Learn more in this week’s Weekly Market Commentary.
Raising Economic And Market Forecasts…Again
On the LPL Market Signals podcast, Equity Strategist Jeff Buchbinder and Asset Allocation Strategist Barry Gilbert update forecasts based on how the economy’s recovery from the pandemic, aided by vaccine distribution, massive stimulus, and the desire to return to normal, continues to surpass expectations.
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