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

Reflecting on the Past Year

March 23rd marked the one-year anniversary of the stock market’s 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.

We spent numerous hours last March talking to families about what the implications of the pandemic could have on their goals, financial plans and investment portfolios. There was absolutely no way for investors to avoid the market’s collapse last year, other than of course not owning stocks to begin with. The only ammunition 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 that are taking place and ask ourselves the important questions—What am I investing for and am I still on track to meet my goals? 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 the goal, the answer to “am I on track” will never be found watching CNBC or reading Wall Street Journal headlines. These goals aren’t dictated by whether the market’s next move is 25% up or down, and they aren’t met by outperforming your neighbors portfolio or an arbitrary benchmark. Investment portfolios are a function and funding mechanism of a family’s personalized financial, income and estate plans.

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

  1. Lack of individualized 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 (and/or their 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 Update

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

Fixed Income Update

Bonds are going to be in a challenging environment for the foreseeable future. Yields are still historically low, reducing the income bond investors can expect. 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 says “Bonds are not the place to be these days. The income recently available from a 10-year U.S. Treasury bond was .93% at year end-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 “safe” bonds will either need to reposition their portfolios or adjust their expectations.

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. 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.

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.

In addition to stimulus payments, the $1.9 trillion bill passed in March will provide an exemption on taxes paid on unemployment benefits up to $10,200.  A $2.25 trillion infrastructure plan introduced by the administration is expected to focus on transportation, clean water, high-speed broadband and manufacturing. Rising fiscal deficits combined 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, individuals, estates, and capital gains.

We hope you have remained healthy and please let us know if you have questions or comments!