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WKLY MARKET ROUND-UP Thru May 28th 2021; EPS vs Interest Rates


Major indexes posted solid gains for the week, bringing the large-cap S&P 500 Index to within roughly 0.5% of the all-time intraday high it established on May 7 and leaving it with a small gain for the month as well as the DOW celebrating its 125th birthday…Growth shares handily outperformed their value counterparts; Facebook and Google parent Alphabet helped communication services stocks outperform within the S&P 500, and a rebound in Tesla boosted consumer discretionary shares…$$ continues to come into US Equity Markets at a 4th biggest rate since 2012…

Weekly jobless claims fell more than consensus expectations, to a new pandemic-era low of 406,000, and durable goods orders excluding the volatile transportation sector increased by 1% in April, also more than expected…while on the downside, some regional manufacturing gauges came in lower than anticipated, although still indicating solid expansion…Negotiations also continued on a new round of infrastructure spending, with Republicans unveiling a $928 billion counteroffer to Biden’s latest proposal of roughly $1.7 trillion… Consumer confidence data pulled back from recent highs, with many polled citing inflation concerns…The Commerce Department reported on Friday that its core (less food and energy) personal consumption expenditure price (PCE) index increased 3.1% in the year ended in April, slightly above expectations and the biggest increase in nearly three decades—and well above the Fed’s 2% target for its preferred inflation gauge.

Fixed income investors appeared to be reassured by the Fed officials’ comments, with the yield on the benchmark 10-year U.S. Treasury note decreasing over the week…The U.S. investment-grade corporate bond market traded with a solid tone for much of the week, supported by generally positive economic signals and better demand out of Asia…negative real yields vs even stronger EPS forward estimates can propel the market price action higher…Markets are now geared towards low Interest rates like crack…

Shares in Europe advanced on continued affirmations of ultra-easy monetary policy and reports of a massive U.S. fiscal spending plan… The UK widened its vaccination rollout to include anyone over the age of 30 although officials said it was still too early to say whether plans to reopen the UK economy would begin on June 21.

Chinese stocks rose strongly, with both the CSI 300 Index and Shanghai Composite Index posting the best weekly gain in more than three months, according to Reuters… Primary home sales in China remained very strong, according to the China Reality Research May survey. Primary home sales surged 50% from January to April over the prior-year period, according to data from 23 developers…


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