The stock markets were mixed last week as the Dow (+1.4%) and S&P 500 (+1.6%) were up, while the NASDAQ (-0.6%) fell for the week. Last week reported the seventh consecutive week that the value index outperformed the growth index, a reversal from last year. This is reflected by the Dow (+8.6%) outperforming the NASDAQ (+2.1%) so far this year. Last Tuesday also marked the one-year anniversary since the bottom of the market, as the S&P 500 has gained about 75% over that time period.
Meanwhile, taxable bonds and tax-free muni bonds were up about 0.4%, despite the 10-year bond remaining virtually flat for the week. That spelled relief for the taxable bonds, as they had been down every week for the past two months. Fortunately, tax free muni bonds have risen three of the past four weeks, and have broken into positive territory for the year.
The stock markets continue to oscillate within a trading range, as there remains opposing forces to their growth. Tailwinds exist because there is continued optimism that the US economy will have strong growth in 2021 and 2022, as more Americans are getting vaccinated and restrictions are being lifted. This is allowing many businesses to re-open and Americans to get out and spend money they have accumulated the past year. The headwinds are because many economists and investors fear the rapid growth of the US economy could cause inflation, which is reflected in the rising interest rates. Thus, the continued tug of war.