Market Update
(all values as of 06.28.2024)

Stock Indices:

Dow Jones 39,118
S&P 500 5,460
Nasdaq 17,732

Bond Sector Yields:

2 Yr Treasury 4.71%
10 Yr Treasury 4.36%
10 Yr Municipal 2.86%
High Yield 7.58%

YTD Market Returns:

Dow Jones 3.79%
S&P 500 14.48%
Nasdaq 18.13%
MSCI-Europe 3.72%
MSCI-Pacific 3.05%
MSCI-Emg Mkt 6.11%
US Agg Bond -0.71%
US Corp Bond -0.49%
US Gov’t Bond -0.68%

Commodity Prices:

Gold 2,336
Silver 29.43
Oil (WTI) 81.46


Dollar / Euro 1.06
Dollar / Pound 1.26
Yen / Dollar 160.56
Canadian /Dollar 0.73

A Reflection on the Past Year

March 23rd marked the one-year anniversary of the stock markets pandemic low. That day, the S&P 500 broke below 2,200 erasing nearly three years of gains in 23 trading days. Between March 9th and March 16th, the market had dropped almost 20% including two days where it actually experienced gains of 5% and 9%. It was one of the most volatile market stretches in history and it only took four months for things to get back to even.

I spent numerous hours last March talking to people about what the implications of the pandemic could have on their goals, financial plans and investment portfolios. There was absolutely no way to avoid the markets collapse last year, other than of course not owning stocks to begin with. The only ammunition I had for these conversations were longstanding fundamentals of how the stock market has historically functioned:

In particularly chaotic years such as 2020, it is helpful to take a step back, tune out the political, market and economic events are taking place and ask ourselves the important questions—What am I investing for and am I still on track to meet my goal? For many families this means amassing enough money to comfortably retire and maintain their lifestyle for 30+ years. For others, it is creating a significant legacy for their heirs or charitable endeavors. Regardless of what the goal is, the answer to “am I on track” will never found on CNBC or Wall Street Journal headlines. These goals aren’t determined by whether the market’s next move is 30% up or down and they aren’t reached by outperforming your neighbors portfolio or a given benchmark. Investment portfolios are simply a function of a families personalized financial and estate plans aligned with their goals.

Investment “failure” is never a product of the stock market itself, after all, how could something that has annualized nearly 10% every year for the last 100 years realize a loss? Investment losses can only happen in one of three ways:

  1. Lack of financial planning
  2. Lack of portfolio diversification
  3. Panicking out of a portfolio in the midst of chaos

All three of these fatal investment flaws are a function of the investor (or their financial advisor) rather than a function of the stock market. Eliminating these three fatal flaws has made it historically impossible to realize a permanent loss of capital in a diversified investment portfolio.



Equity Overview

Stock market optimism from continuing fiscal and monetary stimulus efforts in addition to vaccination progress, drove equites higher in the first quarter. Major equity indices moved higher with the energy, financial and industrial sectors leading in the first quarter.

International developed market indices were mostly positive for the first quarter, with emerging market indices primarily flat to negative amid growing debt concerns. Rising inflation is stoking some hesitation among debt heavy global companies as costs to operate and borrow increase.

LPL Financial’s year end S&P 500 estimate is currently 4,100, which was increased in February. We are fast approaching that target not even half way through the year, so it shouldn’t come as a surprise to see upward revisions as the economy reopens and more vaccines are distributed. Despite the potential for a strong 2021 and 2022, there are near term risks that can’t be ignored. As we have seen the past year, Covid-19 is not going away. The potential for virus variants that may be more resistant to vaccine efforts will be an ongoing battle and it still is not certain for how long an individual will have immunity after vaccination. In addition to virus concerns, Americans are also facing potential tax increases and tougher government regulations in the banking and technology sectors.

Fixed Income Overview

Bonds are going to be in a challenging environment for the foreseeable future. Yields are still historically low reducing the current income investors receive, and they have been moving up in 2021 hurting current bond prices. In the first quarter yields rose across all fixed income sectors, with the 10-year Treasury yield reaching 1.74% as of March 31st, the highest level since January 2020.

In Warren Buffets’ most recent Berkshire Hathaway shareholder letter, he comments “Bonds are not the place to be these days. The income recently available from a 10-year U.S. Treasury bond was .93% at yearend-fallen 94% from the 15.8% yield available in September 1981. Fixed-income investors worldwide-whether pension funds, insurance companies or retirees-face a bleak future”.

While fixed income investments may continue to provide diversification benefits and stability during stock market turmoil, investors hoping to generate meaningful rate of return through bonds will either need to reposition their portfolios or adjust their expectations.

How Government Inflation Gauges Differ 

The traditional gauge for inflation, known as the Consumer Price Index (CPI), is being challenged by yet another government produced measure known as Consumer Expectations. The most recent data released shows an inflation rate of 1.7%, as noted by the CPI compiled by the Bureau of Economic Analysis for February 2021. The Federal Reserve maintains its own inflation gauge, yet is based on consumer expectations of where inflation is headed. That inflation gauge ended February at 3.09%.

Many economists believe the Fed’s inflation gauge to be a more accurate indicator of actual inflation since it is directly based on consumer expectations. The traditional CPI extracts food and energy, ironically two of the most inflationary areas for consumers this past year.

Some of the items included in the CPI basket are housing, clothing, transportation, medical care, and education. The challenge of the CPI is that it takes a look-back approach rather than a look-forward approach which takes consumer expectations into account. Expectations also vary among age groups, where seniors are more concerned about medical care and transportation, while younger adults worry about apparel and housing.

Sources: BEA, Federal Reserve


Macro Overview

The prospect of resurgent inflation has developed into a growing concern for markets globally. Some believe that current inflationary pressures may be transitory and not lasting, while others contend that higher prices may become more permanent.

Rising fiscal deficits along with increasing levels of federal debt are prompting the administration to explore the most significant tax hikes since 1993. Tax increases are being considered for corporations, businesses structured as pass-through entities, estate taxes, and capital gains.

Optimism surrounding a third round of stimulus payments along with rising vaccination rates fueled equity markets in March as an economic revitalization began to take hold. Major equity indices ended the quarter positively as companies saw a resurgence in activity and sales.

The pandemic has brought about modifications and changes to business models throughout numerous industries, many of which are passing along higher costs to consumers. Many of the higher cost trends are not being recognized by some government inflation gauges and not accounted for in forecasts. The suggestion that inflationary pressures are only temporary are being contested as a growing number of businesses are expected to make pricing changes permanent.

The IRS announced that it is extending the tax filing deadline to May 17th, allowing tax payers more time to assess the effects of COVID related changes for individual and small business filers. With the IRS extending the deadline, nearly all states will follow suit and extend the tax deadline to May 17th as well, but most are maintaining the due date of April 15th for estimated tax payments. In addition, the IRS has extended the deadline for 2020 catch up contributions for Traditional and Roth IRAs as well as health savings accounts.

In addition to stimulus payments, the $1.9 trillion bill passed in March, known as the American Rescue Plan Act of 2021, will provide an exemption on taxes paid on unemployment benefits up to $10,200. The IRS communicated that automatic refunds would be issued to those who have already filed their 2020 taxes and have paid taxes on unemployment last year.

A $2.25 trillion infrastructure plan introduced by the administration is expected to focus on transportation, cleaner water, high-speed broadband and manufacturing. An increase in corporate taxes is the primary source of funding the proposed plan, although the proposed rate of 28% will likely fall short of bridging that gap completely.

The rapid rise in mortgage rates since the beginning of the year has led to a slowdown on refinances nationwide. The 30-year fixed rate mortgage reached the highest level in over nine months at 3.17% as of March 25th, yet still at historical lows relative to the 50-year average for a 30-year fixed mortgage rate of 7.88%.

Identified mutations of the COVID-19 virus have raised concerns about the spread of a variant known to be more transmissible than the initial virus, prompting the CDC to caution the public about relaxing preventive measures.

Sources: IRS, Federal Reserve, CDC,

Taxes Hikes are Coming

While the three stimulus programs amounting to over $4.5 trillion were mostly funded by government debt, the recently introduced $2.25 trillion infrastructure plan will be primarily funded by tax increases. Preliminary indications are that the anticipated tax hikes will target both corporations and high earning individuals. The tax increases may be the largest since 1993. The following are among the proposals currently being considered:





The tax proposals as they stand would not likely gain significant Republican support and would require the Biden administration to utilize the reconciliation process for passage. Reconciliation has its own issues and would likely not gain 100% of the Democrat votes. Democratic Senator Joe Manchin of West Virginia has stated he would not support a 28% corporate tax hike and representatives from states such as New York, New Jersey and California likely wouldn’t support a package that didn’t repeal the state and local tax (SALT) deduction limits that has already caused a mass exodus of citizens from these high tax states.

What seems more likely is some compromise to get the bill passed which could look like:

Ultimately, President Biden and his administration have talked out of both sides of their mouths when it comes to taxes, not uncommon for politicians. They have promised multiple times anyone making less than $400,000 would see no increase in their taxes, but have also promised to repeal the Trump-era Tax Cuts & Jobs Act tax cuts. Both of these things can’t happen simultaneously and it will likely be a political balancing act.




Stephen A. Jordan, CFP®                                                 Christina J. Pitcher