Stocks advanced in the second quarter of 2021 as investors cheered a stronger than expected reopening. Sectors such as travel, leisure, and consumer discretionary saw large impulsive spending increases. Meanwhile, the Federal Reserve grappled with whether the price increases seen in the economy were temporary, as a supply constrained environment failed to meet enough capacity of the reopening demand.
The first quarter of 2021 was full of headlines within the stock market. From Gamestop in January to the crumbling of $25bil Archegos in March, explosive events abounded. That being said, the most important narratives began in early January when Democratic candidates won both seats up for grabs in the runoff elections for the US Senate in Georgia to swing the balance of power in Congress. From that date forward, financial markets shifted to reflect a growing importance of fiscal stimulus. While monetary stimulus dominated the 2010s, the fiscal element lacked.
Despite the uncertainty of the US Presidential election, risk assets rallied sharply during the fourth quarter of 2020. Across domestic indices, the S&P 500, Dow Jones Industrial, and Nasdaq Composite rose 12%, 10.7%, and 15.7% respectively in the quarter. International and emerging markets performed even better with the MSCI world and MSCI emerging markets indices rising 14% and 19.6% respectively.
Stocks broadly advanced in the third quarter of 2020. The S&P 500, Dow Jones Industrial, and Nasdaq Composite gained 8.9%, 8.2% and 11.2% respectively during the period ending September 30th. Global markets advanced as well with the MSCI Emerging Market Index rising 9.6% and the MSCI World advancing 8.1%.
Quarterly Commentary is a quarterly view of the equities, fixed income and hedge fund markets from our Family Management specialists.