After some extreme volatility last Thursday and Friday, the Dow (+0.3%), NASDAQ (+0.4%), and S&P 500 (+0.4%) locked in small gains for the week and reached new all time highs. Taxable bonds gained about 0.1% - 0.4%, while tax free municipal bonds rose over 0.5%, as Treasury yields dipped back down below 1.4% at the end of last week.
Stock markets dipped more than 1% on Thursday as Japan declared a state of emergency with respect to the new variant of the COVID virus, and all eyes across the globe will be on Japan in two weeks for the Olympics. Then on Friday, markets snapped back as several major investment banks stated that the global economic revival remains on track. As bad as Thursday was, Friday more than recovered those losses to finish the week slightly positive. Herein also lies two more examples of the markets’ reactions to headline news, rather than the fundamentals underlying the news. In other words, more noise for investors to get emotional about. The real news begins this week, as the 2nd quarter corporate earnings reports begins. Compared to last year’s dismal reports in the midst of COVID, earnings are expected to rise 65%, and will also continue to surpass pre-pandemic earnings.
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