Article 1 of 5: 1st Quarter Commentary

2021 began with great expectations for a roaring economy borne on vaccine availability.

Most everyone, including the stock markets, anticipated the Grand Reopening of a robust economy leading us “back to normal”. But virus mutations and new waves of infection set everything back, impacting consumer behavior and market expectations. Even so, the S&P 500 Index ® returned 27% last year.

The most powerful economic lever will continue to be the Federal Reserve. Supported by highly accommodative fiscal and monetary policies, corporate earnings growth was exceptional. While energy, real estate, and technology led the way, every sector posted double-digit returns!

The largest U.S. companies, across the spectrum from value to growth all performed well, albeit influenced by virus waves and Fed delays responding to inflation. Smaller companies (measured by the Russell 2000 ®) were firmly divided by rate expectations as value rose 28%, and growth was barely positive. The broad bond market index declined 1.6% as only the riskiest segments posted positive returns for the year.

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