2021-Q2 Market Commentary

The second quarter of the year continued to reward investors as the market climbed into new record territory. The S&P 500 finished the quarter up 8.17%, the Dow Jones Industrial Average was up 4.61%, and the Nasdaq Composite finished up 9.49%. Real Estate was the strongest S&P 500 sector for the quarter, followed by Information Technology, Energy, and Communication. Bond yields dropped in Q2 following their rise in the prior quarter as the yield on 10-year U.S. Treasuries dropped from 1.74% at the end of the Q1 to 1.45% at the end of the Q2.

Inflation remains a key focus for many investors as U.S. consumer prices were up by 5.4% year to date ending June 2021, the largest annual increase since 2008. Excluding energy and food, the CPI rose 3.8% over the 12-month period, the largest one-year increase since 1992. Oil prices continued to increase in Q2, up 24.19%, and are now up 51.42% since the start of the year. Gasoline prices continue to rise as well, up 36.43% since the start of the year. U.S. median existing-home sales price reached new record territory in Q2 as people continue to seek more space and bigger homes.

The easing of restrictions on businesses and the Covid-19 vaccine rollout has not helped the labor market as much as anticipated. States are weighing options for unemployment benefits while job openings hit a record high as businesses struggle to fill open positions. The Fed implied monetary policy is not likely to be tightened any time soon, while the battle over additional spending drags on in Washington as the deficit continues to grow. Earnings growth this year is expected to be very positive and there seems to more clarity compared to where we were this time last year.