May 1, 2021
April was a positive month for all three of the major indices. With earnings season in full swing, investors continue sifting through the numbers, and more importantly, looking at the companies’ guidance for the future. The past week's earnings reports included largely positive results from the world's largest technology companies. With just over half of S&P 500 index companies reporting earnings for the quarter so far, about 87% beat market expectations.
The message from many of these firms is that most of the world is moving again, with businesses investing in areas like technology, advertising, and consumers spending. Summer typically brings a lull, and the market will be looking to the future and considering more seriously about possible interest rate hikes following the economic recovery.
As the Federal Reserve begins its meeting, an interesting side note is that they have stated that their focus is more on outcomes versus outlooks – particularly regarding employment. In other words, rather than doing a preemptive rate hike to slow growth and limit inflation, the Fed wants to see better employment before applying the brakes on the economy. Perhaps these are lessons learned from the past where too much too soon has had a dramatic negative affect on national growth and employment.
Although the proposed tax hikes are being touted to only affect the super wealthy, one aspect that is not being discussed much by the media is the possible elimination of the step-up in assets’ cost basis at death. The elimination of this will have a dramatic effect on anyone who owns highly appreciated property at their death. This will certainly add significant revenue to government coffers to pay for current and proposed spending.
Year to date, the Dow, S&P 500, and NASDAQ were all in the black at 10.85%, 11.32% and 8.34%, respectively, while the 10-year Treasury is currently yielding 1.65%.
*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.