Week of April 19, 2021

Solid performance from the U.S. equity markets last week, with the Dow and S&P 500 gained 1.2% and 1.4%, respectively, for their fourth straight weekly gain.  The NASDAQ rose 1.1% and booked its second-highest finish of all time, also for its third straight weekly gain.  Stocks received a lift last week as earnings season got under way with solid results from big banks and as investors digested strong economic data.

While stocks may be set to pause their advance today (Monday), analysts said the tone remained positive amid the lack of any major negative catalyst.  “Overall, it looks like clear skies for the equity markets.  Policy makers are still holding investors by the hand and vaccine programs have accelerated dramatically,” said Marios Hadjkyriacos, investment analyst at XM.  “The only real risks on the radar are excess inflation that leads the Fed to shift gears abruptly, some new vaccine-resistant variant, or the geopolitical temperature rising further in critical theaters like Ukraine and Taiwan,” Hadjkyriacos continued.

Investors continued to watch the debate around President Biden’s infrastructure plan, including his call to raise the corporate tax from 21% to 28%.  Axios reported Sunday that resistance among Senate Democrats was likely to limit a rise in the tax rate to 25%, which would raise $600 billion over 15 years and come in well short of offsetting the price tag of the eight-year $2.25 trillion package.

Investors are gearing up for a busy week of corporate earnings, with 81 S&P 500 companies, including 10 components of the Dow, set to report results.