Gradient Investments Weekly Talking Points 6/1/2021
All data is for the week ended May 28, 2021
Stocks
The US equities market was relatively quiet last week as people geared up for the most active holiday weekend in over a year. The S&P 500 rose 1.20%, the Russell 2000 added 2.45% and the NASDAQ increased 2.08%. Overseas markets were also positive with the international developed market (MSCI EAFE) up 1.24% and the emerging markets (MSCI EM) rising by 2.39%. Within the US, communication services and consumer discretionary were the best performing sectors while utilities and health care were the poorest performing sectors.1
Fixed Income
Interest rates dropped and bond values rose last week with the benchmark 10-year treasury rate down 5 basis points to 1.58%. The yield curve was unchanged.2
Commodities
Gold, a Precious Metals and ETF Endowment Strategy holding, closed at $1,911.80 per troy ounce last week – crossing a key price of $1,900 – after rising 7% in the last month. Rising inflation is likely the key driver along with the considerable volatility in cryptocurrency over the last six months.3
Economic Data
Initial claims for unemployment benefits fell to a new pandemic low of 406,000 last week, better than the 425,000 expected, marking the fourth consecutive week of declines.4
New orders for durable goods – excluding volatile aerospace, auto and defense spending – rose 2.3% in April on top of a 1.6% gain in March. This is positive for business investment. Growth in inventories continues to trail orders, indicating strong production will continue. 5
The inflation rate most watched by the Federal Reserve, personal consumption expenditures (PCE), accelerated to 3.6% in April from 2.4% the prior month, ahead of expectations and the highest in nearly 13 years. Excluding volatile food & energy, the core PCE rose 3.1%, also an acceleration from 1.9% in the prior month.6
Company News7
Raytheon (RTX), a G50 holding, is a beneficiary of the ramp up in airplane production announced by Airbus (EADSY) last week. 8 Additionally, another major buyer of Raytheon products and services, General Electric said that it is continuing to improve its financial condition.9 Shares in Raytheon rose 3.4% for the week.
Square (SQ), a G33 holding, shares rose on a report that the company is expected to offer checking and savings accounts to small business customers. The stock was up 11.25% for the week.10
Synopsys Inc. (SNPS), a Core Select holding, increased 5.0% following their earnings report in which the design automation software company’s revenues and earnings exceeded expectations and management raised guidance for the full year.11
Did you know…
Pablo Picasso’s full name has 23 words and 103 characters. His full name is Pablo Diego José Francisco de Paula Juan Nepomuceno María de los Remedios Cipriano de la Santissima Trinidad Martyr Patricio Clito Ruíz y Picasso.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 5-31-21
2 US Treasury
3 Apmex
4 US Department of Labor 5-27-21
5 Census Bureau report 5-27-21
6 Bureau of Economic Advisors 5-28-21
7 All weekly changes in company stock prices: Yahoo Finance
8 Airbus press release 5-27-21
9 Reuters “GE Expects to Burn Less Cash” 5-27-21
10 Bloomberg Law “Square Takes Aim at JP Morgan with Checking, Savings Accounts 5-24-21
11 Synopsys press release 5-19-21
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