Market Outlook - February 2021
Bond Market
The 10-year U.S. treasury rate crossed above 1% in January for the first time since March 2020. The financial advisors and myself still think there is a higher probability of rising long-term rates which, combined with a low-income starting point, keeps bonds still unattractive in our view. While we don’t expect much in the way of performance, continued holdings in bonds still provides ballast for the volatility of equities.
For new money allocations, the Fixed Income Total Return remains our preferred bond portfolio, but for those that can handle a higher level of risk, the ETF-A (with a conservative blend of bonds, stocks, and alternatives) may provide a better short to intermediate term return profile.
Stock Market
Stocks began the month with continued momentum that we saw in the ending months of 2020. As the month closed, however, stocks reverted and ended slightly down for the month as discussions of lengthening COVID restrictions began to weigh on performance. As we stated above, the committee added to the Core Select and G50 allocations as we believe large cap core and value stocks offer a slightly better opportunity after the recent small cap rally. These portfolios would also be our favored new money allocations.
The President signed into law another $1.9 trillion of stimulus, bringing the total stimulus approved by Congress and the President to $6 trillion over the past year. The broad U.S. market index (S&P 500) rose 2.69%, the Russell 2000 increased 7.36% and the NASDAQ added 3.12%. Overseas, the international markets (MSCI EAFE) increased 3.00% while the emerging markets (MSCI EM) added 0.70%. In the U.S., the best performing sectors were real estate and consumer discretionary while communication services and energy were the laggards. As in the prior week, small cap value stocks were the best performers by style.
Source: Gradient Investments
For further analysis, contact me or your Copley Financial Group, Inc. financial advisor, and we will be more than happy to walk you through what’s going on. Here at Copley Financial Group, Inc. with locations in San Diego, CA. and Uniondale, NY. the team and myself will be with you during this process.
