Pre-marketing in early summer
Even though the calendar still says it’s officially late spring, it really does look like summer here. And with nearly all of the major economic news and first quarter earnings reports coming out this week, we expect the start of a summer weekend to start early to hit the markets today.
Then again, investors in the Dow Jones may have something to say about this, +100 points in the pre-market. The S&P 500 and Nasdaq are up single digits at this time.
This gives us the opportunity, halfway through 2021 (where’s the time going ?!), to “take stock” a little: the Dow Jones and the S&P 500 have followed relatively aligned, since the beginning of the year. – + 14% and + 14.5%, respectively, although both have been in a flat range since mid-April. Both peaked at the end of the first week of May, but most of the gains since the start of the year have so far come in the first four months of the year.
The Nasdaq is another story: + 10.4% year-to-date – and on an upward trajectory this week as well – but in a series of peaks and valleys: we have seen highs in mid-February return early March. The streak repeated itself with a new all-time record in April shot in mid-May. Much of this has been part of the spin-off trade from growth to cyclical stocks, with the desired outcome of less than staggering gains in the face of the Grand Reopen.
So far in 2021, the small cap Russell 2000, + 18.8% year-to-date, has overtaken the pack. In this index, the gains are the result of a series of ramp-ups: early January, early February, early March, late April, and late May / early June. Small caps generally bring a sense of “risk on” the appetite of the market, with the Russell often – but not always – following purchases in growth and tech stocks on the Nasdaq.
However, a better return on investment so far this year has been in home equity, + 20% (according to a survey of mortgage holders, which does not include all homeowners). A cumulative amount of $ 1.9 trillion, or $ 33,400 per US borrower, is largely due to high demand and low supply, pushing up prices, especially in March (+ 11%) and April (+ 13%). Sales have slowed lately due to affordability concerns, but demand ensures prices will stay high for now.
Next week will be important for economic metrics, and we’re just a month away from the tap of the second quarter earnings season (where’s the time ?!). In the meantime, if the weather is nice where you are, you might wake up for a moment knowing that the markets are indeed reflecting a truly improving economy, and should continue to do so for a while.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.