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Weekly Market Commentary

Weekly Market Commentary – 3/5/2021

-Darren Leavitt, CFA

US financial markets finished the week with mixed results as another spike in interest rates induced a sharp sell-off in growth stocks.  Inflation concerns were heightened on commentary from Federal Reserve Chairman Jerome Powell and perpetuated the latest rotational trade we have seen in the last few weeks.  A robust February Employment situation report further stoked inflation fears and pushed the 10-year bond yield to 1.61% at one point.  Oversold conditions that saw the S&P 500 down as much as 5% on the week and the Nasdaq down as much as 11% brought in ” buy the dip” buyers mid-day Friday.  The S&P 500 closed 2% higher on Friday to close above its key 50-day moving average of 3822.

For the week, the S&P 500 gained 0.8%, the Dow led with an increase of 1.8%.  The NASDAQ tumbled 2.1%, and the Russell 2000 gave back 0.4%.  The yield curve steepened again, with the two-year note yield increasing one basis point to 0.14% and the 10-year bond yield increasing by nine basis points to close at 1.55%.  Gold continued to struggle despite the increased fears of inflation.  Gold prices fell $29.90 or 1.7% to close at $1698.50.  OPEC’s decision to keep production cuts in place fueled oil prices and the energy sector.  WTI prices closed 7.6% higher than a week ago, closing at $66.09 a barrel.  The energy sector gained another 10% on the week and has been the best performing sector over the last several weeks.

Comments from Federal Reserve Chairman on Thursday on inflation sent the Ten-year bond eight basis points higher and helped catalyze a sharp sell-off in stocks.  The Chairman continued to express that the current accommodative monetary stance was appropriate and conveyed that yield curve management on the long end of the curve was not a tool they would use right now. The Chairman did acknowledge his concerns on the further tightening financial conditions and its effect on the Fed’s employment mandate.

The February Employment Situation Report was much stronger than expected, with non-farm payrolls coming in at 379K versus the estimate of 200K.  Private Payrolls were even more potent, coming in at 465K versus the consensus estimate of 195K.  The Unemployment rate fell to 6.2% from January’s 6.3%.  The Labor Participation rate continued to underwhelm with a reading of 61.4% relative to last January’s reading of 63.3%.  The better-than-expected report comes as more geographies curb lockdown mandates and more individuals are being vaccinated.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

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Investment advisory services are offered through Foundations Investment Advisors, LLC and is a SEC registered investment advisor.

Investment advisory services are offered through Donato Wealth Management and is a SEC registered investment advisor.