| Gradient Investments Weekly Talking Points 04/12/2021 All data is for the week ended April 9, 2021. Stocks Stocks were mixed last week as large cap growth stocks – particularly technology – drove the gains. The S&P 500 rose 2.76%, the Russell 2000 declined 0.46% and the NADSAQ advanced 3.13%. International developed markets overseas (MSCI EAFE) added 2.01% while emerging markets (MSCI EM) eased 0.34%. In the U.S., the energy and real estate sectors were the laggards.1 Fixed Income Interest rates fell and values rose, with the benchmark 10-year treasuries yield down 5 basis points to 1.67%. This decline occurred despite higher than expected producer prices (see Economic Data below) as the spike in prices are expected to be temporary.2 Commodities The price of West Texas crude oil dropped 3.45% last week3 as the Energy Information Administration projected U.S. oil production to rise by 500,000 barrels per day by the end of this year.4 Economic Data The service sector (about two-thirds of our economy) grew at a rapid clip in March as the U.S. further loosened COVID-related restrictions. The ISM index rose to 63.7 last month from 55.3 in February vs. expectations for 59. Note that any number above 50 indicates expansion. Producer prices rose faster than expected in March. The overall inflation was 4.2% on a year-over-year basis when prices started to decline due to COVID-19. The cost of goods sub-index rose at the fastest rate since December 2009. More than 25% of that gain was due to a spike in gasoline prices. Shortages of materials have driven up input prices while at the same time producers are contending with higher shipping costs and bottlenecks particularly for home building.6 Mortgage applications fell 5% in the week ended April 2 from the previous week, marking the fifth consecutive week of declines. This comes as long-term mortgage rates, which use the 10-year Treasury yield as a benchmark, have risen steadily this year to 3.36%. On a year over year basis, applications were 51% higher.7 Company News8 Planet Fitness (PLNT), a Contrarian Choice and G33 holding, has been a beneficiary of the re-opening optimism post-COVID for memberships at brick and mortar fitness gyms. Shares rose 9.2% last week.11 Snap Inc. (SNAP), a G33 holding, will utilize software from a recent acquisition to fuel the sale of apparel to its Snap users based on the saved “memories” photos of these users. Shares rose 16.1% for the week.9 Square Inc. (SQ), a G33 holding, has joined forces with Fidelity Investments and Coinbase Global (COIN) to form a lobbying group which aims to influence regulations on cryptocurrencies. Shares rose 14.0% for the week.10 |
| Did you know … Three quarters of “paper” money is actually composed of cotton. Much of this cotton comes from denim scraps left over from jeans manufacturing. |