Fortis Wealth Management

(888) 336-7847

January 2021
Market Update
(all values as of 12.31.2023)

Stock Indices:

Dow Jones 37,689
S&P 500 4,769
Nasdaq 15,011

Bond Sector Yields:

2 Yr Treasury 4.23%
10 Yr Treasury 3.88%
10 Yr Municipal 2.27%
High Yield 7.39%

YTD Market Returns:

Dow Jones 13.70%
S&P 500 24.23%
Nasdaq 43.42%
MSCI-EAFE 15.03%
MSCI-Europe 16.68%
MSCI-Pacific 12.07%
MSCI-Emg Mkt 7.04%
US Agg Bond 5.53%
US Corp Bond 8.52%
US Gov’t Bond 5.72%

Commodity Prices:

Gold 2,071
Silver 24.02
Oil (WTI) 71.33


Dollar / Euro 1.10
Dollar / Pound 1.27
Yen / Dollar 140.98
Canadian /Dollar 0.75

Macro Overview

COVID-19 reshaped financial markets, trade, retail, and consumer behavior globally in 2020, with lingering effects heading into 2021. Markets shrugged off pandemic concerns toward the end of the year, with all major U.S. equity indices reaching new highs in December. The distribution of vaccines, along with an anticipated resurgence in consumer demand, could elevate economic activity to levels last seen prior to the emergence of COVID-19.

The recently-passed $900 billion Coronavirus Relief Bill will place checks into the hands of millions of Americans, extend unemployment benefits, and provide renewed funding for the Paycheck Protection Program (PPP). Other provisions in the relief bill include deductions for business meals in 2021 and 2022, and a ban on surprise medical billing.

Vaccinations across the United States and internationally are expected to take months as distribution efforts pose a challenge. The CDC estimates that at least 70% to 80% of the 330 million U.S. population needs to be vaccinated in order to achieve herd immunity. Guidelines issued by the CDC suggest that healthcare and essential workers should receive vaccinations first, then offered to the general public. The CDC is delegating the distribution of vaccines and the prioritization of inoculations to the individual states.

Economic analysts widely expect optimism regarding the national vaccination campaign to propel consumer confidence higher, potentially leading to elevated spending levels. Employment and wages, which were under pressure for most of 2020, are also critical factors in determining ongoing consumer expenditures. Consumer inflation expectations rose in 2020 with the anticipation of lasting inflationary pressures heading into 2021.

The Federal Reserve communicated in December that it would continue to keep the federal funds rate near zero and buy $120 billion worth of bonds monthly until the employment situation improves. Rates held relatively steady near historic lows in 2020, as ambitious efforts by the central bank facilitated liquidity and borrowing to support economic stability.

Behavioral consumer changes precipitated by the pandemic shifted spending from restaurants, travel, and movies to grocery stores and online shopping. Some economists expect these trends to remain even in a post-pandemic environment.

Sources: Federal Reserve, CDC, Treasury, Tax Foundation

Margin loan balances increased to $722 billion

Markets Remained Resilient In 2020 – Equity Overview

Equity markets rebounded from the lows in March 2020 to the end of the year, driven by vaccine optimism, low interest rates, and continued stimulus funding.

Margin loan balances increased during the pandemic, eclipsing $722 billion through November and surpassing the previous high of $668 billion in May 2018, as reported by the Financial Industry Regulatory Authority.

Despite headwinds from the pandemic, global equity markets were resilient for the most part, ending the year with favorable returns. Growth and momentum led the way, with the technology and consumer discretionary sectors rising the most.

The steep COVID-driven selloff in March and the subsequent recovery by August were of historic proportions, with unprecedented rebounds across nearly all sectors of the equity markets in 2020. (Sources: FINRA, Bloomberg)

Rates Held Steady Throughout 2020 – Fixed Income Update

Rates remained near historic lows throughout 2020 as ambitious efforts by the Federal Reserve and the Treasury ensured liquidity in the fixed income markets.

Key rates fell across the board in 2020, as accommodative monetary and fiscal policy initiatives contributed to a low-rate environment. Mortgage rates fell to new lows in 2020 a dozen times according to Freddie Mac weekly data, triggering a flurry of refinance activity throughout the year.

The U.S. Treasury yield curve steepened toward the end of 2020, an indication to economists that inflation is expected to increase. The yield on the 2-year Treasury fell to 0.13% as the yield on the 10-year Treasury rose to 0.93 % in December, pushing short-term yields lower and sending longer term yields higher. Economists and market analysis view a steepening yield curve as validation that economic expansion is a promising possibility. (Sources: Treasury, Freddie Mac, Federal Reserve)

Workers Hesitant To Quit During Pandemic – Worker Confidence

Confidence among workers to freely quit and leave their current job has historically been an indicator of the condition of the labor market. As COVID-19 took its toll on the economy, with layoffs increasing, workers were less likely to depart their jobs due to fear that they might not be able to find another position.

The Department of Labor tracks voluntary job exits, also known as quits, which are considered very different from layoffs and work reductions. Fewer workers quitting reduces wage increases, as employers often maintain wages for workers not confident enough to quit. (Source: Department of Labor)


nearly 75% of stay at home workers earn $200k & above

Grocery Store Sales Take Off In 2020 – Consumer Behavior

As local and state governments implemented restrictions on restaurant dining, consumers instead headed to grocery stores. Grocery stores witnessed an immediate surge in customer purchases as news about restaurant closures and dwindling inventories of toilet paper and other essential items dominated headlines on social media and television.

Various products, from frozen foods to toilet paper, experienced steep increases in sales as the pandemic set in. Not only did demand for such products increase, but so did prices, allowing many food-related companies to maintain profit margins.

Many economists expect the shift to grocery stores by consumers to potentially have lasting effects, changing the way consumers feed themselves. (Source: Federal Reserve Bank of St. Louis)

Ability To Work From Home Tied To Income – Labor Market Update

As stay-at-home mandates came into effect throughout the country, companies scrambled to migrate their management teams and employees to home offices. Data tracked by the Labor Department revealed that high-income positions, which include management and technology jobs, were most likely to shift to home offices. Data also revealed that lower-paid employees were the ones often did not have the ability to transition to work-from-home status, since many lower-income jobs are located in sectors that require in-person employee presence.

Analysts expect that many of the companies that transitioned employees home temporarily may eventually decide to make some of the transitions permanent. The shift in workplace dynamics that occurred in 2020 was substantial, potentially producing persistent changes for years to come.

Source: Department of Labor

inflation expectations by consumers is 2.96%

Coronavirus Relief Bill Overview

The second COVID-related stimulus package extends and modifies several provisions first enacted by the CARES Act in March 2020. The package extends relief through mid-March of 2021, providing support to individuals and small businesses. Following are highlights from the relief bill:

Stimulus Payment: A one-time direct payment in the amount of $600 for individuals earning up to $75,000, heads of household earning up to $112,500, and couples earning up to $150,000. There is also an additional $600 per eligible child dependent, and the direct payment amount is gradually decreased for those earning over the income thresholds.

Extension of Unemployment Insurance Compensation Benefits: Unemployment benefits is extended for 11 weeks and will expire on March 14, 2021.

Paycheck Protection Program (PPP): Forgivable loans for first-time and second-time small business borrowers. Deviating from the initial PPP provisions, businesses can deduct expenses paid with forgiven PPP loans, and there is a simplified forgiveness application for loans up to $150,000.

Business Meal Deductions: Small businesses can now deduct up to 100% of business meal expenses for 2021 and 2022.

Medical Expenses: A ban on “surprise” medical billings.

Eviction Moratorium: Extended through January 31, 2021. (Source: Tax Foundation)

Consumers Expect Inflation To Rise – Inflationary Pressures

While government data puts current inflation at 1.2%, consumers have higher inflation expectations. The Federal Reserve Bank of New York tracks and maintains consumer inflation expectations every month, separate from traditional inflation data tracked by the Bureau of Labor Statistics.

The median one-year inflation expectation by consumers is 2.96% as of November 2020, nearly 2 1/2 times what the current inflation rate is. This consumer inflation expectation measurement is distinct from the Consumer Price Index (CPI), which reflects price levels for certain goods and services. Many economists view consumer expectations as a more valuable reading on inflation than the CPI, since consumer sentiment projects future rates and is not constrained by the CPI’s designated basket of goods and services.

Inflation expectations rose during the pandemic as consumers witnessed first-hand price increases on groceries and essential items including toilet paper and hand sanitizers.

Source: Bureau of Labor Statistics