While a little bumpy along the way, the markets performed fairly well this week amid news of bank earnings, consumer prices and COVID-19 vaccines. All things considered, investors have behaved calmly and taken everything in stride.
This week it was announced that six individuals who had received the single dose Johnson & Johnson COVID-19 vaccine experienced a rare blood clot. As such, the Centers for Disease Control and Prevention and the Food & Drug Administration (FDA) decided to pause usage of the Johnson & Johnson vaccine while federal health officials reviewed data related to the clotting events and mulled updated guidelines. Acting FDA Commissioner Janet Woodcock told reporters on Tuesday she expected the pause to last "a matter of days." Stocks in economically sensitive areas such as energy and financials initially sold off, but they have since recovered.
On the earnings side, multiple investment banks reported strong results this week. The banks saw notable strength from trading as well as investment banking, which has benefited from a spike in deal making. While the capital markets side of large banks has been faring well, the lending side has been less robust. As both consumers and corporations are flush with cash, the need to take out loans has lessened.
Finally, the March Consumer Price Index (CPI) data was released this week and it showed that monthly consumer prices rose the most since the summer of 2012. This short-term surge in inflation was due to a confluence of rising demand, supply shortages and increasing commodity prices. While sometimes it can be scary to see a jump in consumer prices, this increase in CPI felt well-telegraphed, if not outright expected. As such, both stocks and bonds largely shrugged it off. This is a good sign—it means the market believes that the reopening of the economy will lead to some near-term inflation, but that long-term inflation should be less of an issue.
Stay safe and be well.
Market comments are based on the S&P 500 index which is unmanaged and cannot be directly invested into. Past performance is no guarantee of future results.
Investing involves risk and the potential to lose principal.
Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed
April 15 Weekly Market Update
April 15, 2021