12 03/21 12/03/2021

Financial Markets Update - Week 10

The U.S. financial markets stabilized this week and started to move back north. The U.S. economy is still strengthening and the approved $1.9 trillion U.S. stimulus plan is putting pressure once again on growth stocks and bonds. Oil continued on the rise surpassing $71 per barrel for the first time in more than a year but retracted later in the week. The stock market rotation is persisting while bond yields are cooling off from last week highs.

There is an increasing amount of capital flowing into the stock market, but these are more focused on the 2020 laggers (energy, financials, manufacturing) which are less represented in the major stock indices. This means that value/ recovery stocks are expected to outperform the major indices such as the NASDAQ and the S&P 500 for the foreseeable future. The rotation is not just persisting, it is picking up speed. Inflation grew by 0.4% according to the U.S. Bureau of Labor Statistics. The DOW closed above 32,000 points for the first time ever thanks to the Consumer Price Index (CPI) report that indicated that inflation is still under control.

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