Rotating Waiting Summer Stall Still
Weekly Market Update: Waiting and rotating: summer “stall” continues. We are in the “summer stall” for the stock market. In our view, it started “Tax Day” on April 15. Since then, the S&P 500 has flattened out. And the S&P 500 is still up more than 6% over the past three months and more than 10% on the year.
Rotating ahead
There was a lot of the day-to-day and week-to-week noise. Regardless, it is still a favorable environment for stocks — even if they are trading in a ‘normal’ post-COVID environment and we need to churn through a normal but slower second quarter.
The S&P 500 pared early week losses to end the week down -0.43%. The US dollar weakened to a 5-month low. Against the backdrop of weaker economic data, and a slow Federal reserve, 10-year Treasury yields held in a 9-basis point range.
Rotating leading sectors
Growth at any price early pandemic leadership gave way to sectors that benefit from a more normal economy as high-priced growth sectors lost their edge as evidence of inflation accelerating became apparent. Over the past three months, technology and consumer discretionary have lagged the S&P 500. And economically sensitive materials, energy and industrials have led.
Oak Harvest expects a very strong second half of the year. So, the investment team continues to look for opportunities to buy our portfolio names at cheaper prices. We expect volatility in the S&P 500 to continue in the second quarter, perhaps resulting in a pullback reaching around 3985–4015.
Cumulative Market Total Returns, Week Ending 5/21/2021
Resources
- Last Fridays Podcast: Waiting: Patience Required to Hit the “Curve” Ball
- Find more information and help on our YouTube Channel.
- Check out these helpful podcasts by Chris Perras, CFA®, here.
Interesting reading
- White House makes $1.7 trillion infrastructure counteroffer — but Republicans say sides now seem further apart
- It’s a good time to buy low, sell high daily, says Tom McClellan
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