The Week On Wall Street
Stock prices inched higher last week amid declining COVID-19 cases, a pick-up in vaccinations, and progress on a fiscal relief bill.
The Dow Jones Industrial Average gained 1.00%, while the Standard & Poor’s 500 rose 1.23%. The Nasdaq Composite Index climbed 1.73% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, added 1.80%.1
Stocks Post Gains
Stocks powered higher to begin the week, buoyed by rising confidence in economic recovery and the potential for another round of fiscal stimulus. Small-cap stocks continued their 2021 rally as investors looked for out-of-favor names that might benefit from an economic rebound.
Stocks traded in a tight range through the remainder of the week. Investors appeared to digest current stock price valuations, wondering if the market had already “priced in” the optimism of a rebounding economy.
On Wednesday, Fed Chair Powell gave assurances that the Fed’s rate policy would remain unchanged for the foreseeable future. Some fear that inflation may pick up with broader reopenings and additional fiscal stimulus.2
On Thursday and Friday, stocks drifted mostly higher in quiet trading, managing to set some new all-time highs.3
Economic Expectations Rising
A survey by The Wall Street Journal showed increasing optimism among economists about economic growth for this year.1
Among the survey’s findings, economists, on average, now expect the economy to expand by 4.9%, an increase from their average estimate of 4.3% last month. They are, however, somewhat less sanguine about employment as they now expect 4.8 million jobs to be added this year, versus an earlier expectation of 5.0 million.1
Economists are forecasting accelerating inflation as a consequence of economic growth and fiscal stimulus, but believe that there is only a 17.5% probability of an economic downturn in the next 12 months, an improvement from its 21.2% risk estimate in January.1Posted on