Pride Before the Fall?

Post On: April 6, 2021

Posted In: General Investment News

The holiday-shortened week capped off a strong first quarter for stocks, with the S&P 500 crossing the 4,000-point mark for the first time ever. Among the highlights were consumer confidence increasing to its highest level since the onset of the pandemic and manufacturing activity expanding at the fastest pace since 1983. Within all of the sectors, growth stocks widely outperformed value shares for the first time since January. That was welcome news for our portfolios!

 

Things are certainly looking good on many fronts. On Tuesday, The Conference Board announced that its index of consumer confidence had registered its biggest gain in nearly 18 years, while its gauge of consumer expectations had reached its best level since the summer of 2019. Regional manufacturing indexes also surprised strongly on the upside, while the Institute for Supply Management’s gauge of factory activity hit its highest level since December 1983.

 

All of that said, let’s not lose sight of the rough seas on the horizon.  Proverbs 16:18 reminds us that “Pride goes before destruction, a haughty spirit before a fall.”  We continue to anticipate a correction, and we are actively thinking about the best ways to both minimize loss and capture returns, regardless of when and how any market fluctuations occur.  We remain humbled and honored by the opportunity to steward blessings for so many, and we pray that the Lord’s will includes our continued discernment.

 

One impetus for rough seas could be gainful employment, as the effect from stimulus checks wears off.  Payroll processor ADP’s tally of private-sector job gains in March missed consensus forecasts by a bit, when it was released Wednesday and, on Thursday, the Labor Department announced that weekly jobless claims had increased to 719,000, from a downwardly revised (and pandemic-era low) of 658,000 the week before.

 

The jobless claims data seemed to drive a decline in the yield on the benchmark 10-year U.S. Treasury note at the end of the trading week (bond prices and yields move in opposite directions, while demand for the safety of bonds and bond prices move in similar directions).  Municipal bonds continued to outperform Treasuries for much of the week, as flows into municipal bond funds reached a record high, according to Lipper data.

 

Although the jobless claims and correlated bond price movement have the makings of a downward trend in the market, the high-yield market (which is more closely correlated to stock performance) was also stronger, as the projected positive economic impact of the Biden administration’s infrastructure plan seemed to offset the inflation fears that have been weighing on broader risk markets recently.

 

The waters are murky and the horizon unsettled, but our team remains steady at the helm.  There are still significant opportunities, today, and there appear to be ample lanes for continued growth ahead.  We’ve got our eyes peeled!

 

Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposes of avoiding penalties that may be imposed by law. Each tax payer should seek tax, legal or accounting advice from a tax professional based on his/her individual circumstances.
This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions. Information has been obtained from sources believed to be reliable and are subject to change without notification. The information presented is provided for informational purposes only and not to be construed as a recommendation or solicitation. Investors must make their own determination as to the appropriateness of an investment or strategy based on their specific investment objectives, financial status and risk tolerance. Past performance is not an indication of future results. Investments involve risk and the possible loss of principal.

Recent Posts

Safe Harbor: A Cure for Your Testing Headaches

A crucial requirement for 401(k) plans is that the plan must be designed so it does not unfairly favor highly compensated employees (HCES) or key employees (such as owners) over […]

Read More
Looking to Maximize Retirement Savings? A Cash Balance Plan Could Be the Answer!

So, you established a 401(k) plan for your company and have been contributing consistently for years. The plan has likely afforded your company significant tax savings and has allowed you […]

Read More


Let our professional financial advisors help you achieve the legacy you desire for yourself, loved ones, and organizations. Contact Us