June 1, 2021
As we welcome in summer the markets have been temperate for the month of May. Stocks posted modest gains to close out the month despite mixed economic data, and volatility sank to its lowest levels of the month. Barring some unusual and unexpected events, the hottest months of the year are often uneventful in the stock market.
We expect to see the summer news focus on inflation and prices in general and as pandemic related unemployment bonuses run out and people start to return to work. The stock market media has a tough time over the summer to find stories and often raise the alarm when the markets have a shift of 200 points on the Dow which now sits at 34,529.
Since earnings announcements will not begin in earnest until August there will be little in the way of hard data to drive the markets up or down; emotional aspects will be another matter. The biggest focus will likely be the discussion surrounding the $6 trillion budget proposal for fiscal 2022 and how and where the government expects to procure funds. It would be nice to get the benefits of more spending without the cost of higher taxes and so far, that has worked with borrowing rates staying low.
Commodity prices may be the first to accelerate inflation with lumber quadrupling and corn, copper, and oil more than doubling. This is likely to slow housing starts and the accompanying industries and corresponding supply chains.
Through Memorial Day, the Dow, S&P 500, and NASDAQ were all on the plus side at 12.82%, 11.93% and 6.68%, respectively, while the 10-year Treasury is currently yielding 1.58%.
To those of you who have travel plans over the summer, stay safe and let us know in advance of any large, anticipated cash needs you may have for the next 6-12 months.
*Disclaimer: This report is a publication of Marchand Faries Financial Management, Inc. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the author as of the date of publication and are subject to change.