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THIS WEEK'S UPDATE

| March 22, 2021
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THE WEEK ON WALL STREET
Rising bond yields and improving economic conditions led to a choppy week of trading that ended in modest losses for investors.  The Dow Jones Industrial Average fell 0.46%, while the Standard & Poor’s 500 declined 0.77%. The Nasdaq Composite index lost 0.79% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 1.24%.
 
RISING YIELDS
The stock market began the week on a positive note, rising on optimism over the economic reopenings and a decline in bond yields. Technology shares staged a strong turnaround from the previous week.   Following the FOMC (Federal Open Market Committee) meeting announcement reaffirming the Fed's easy-money policies, the Dow Industrials and the S&P 500 recorded new record closing highs.  Markets reversed themselves on Thursday as a surge in yields sent technology and other high-growth stocks lower. During the session, the 10-year Treasury yield moved above 1.75% (the highest in 14 months), and the 30-year Treasury breached 2.5% for the first time since August 2019.  Stocks closed out the week mixed as technology reclaimed some of the previous day's losses.  

THE FED STANDS PAT
The Fed restated its commitment to no interest rate hikes through 2023. As expected, the FOMC also voted to continue its monthly bond purchases of at least $120 billion.  FOMC members projected that the economy would grow 6.5% this year, a sharp improvement over its previous estimate of a 4.2% gain. The forecast for the unemployment rate by year-end is 4.5%, down from the current rate of 6.2%. While Fed Chair Powell said that he anticipates inflation rising this year, he expects price increases to be temporary, with inflation staying within the Fed’s 2% target for the next several years.
 
THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: Existing Home Sales. 
Tuesday: New Home Sales.
Wednesday: Durable Goods Orders. Purchasing Managers’ Index (PMI) Composite Flash. 
Thursday: Gross Domestic Product (GDP). Jobless Claims.
Friday: Consumer Sentiment.
 
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: Adobe, Inc. (ADBE), Gamestop Corporation (GME)
Wednesday: General Mills (GIS)
Thursday: Darden Restaurants, Inc. (DRI)

FINAL THOUGHTS

The economic calendar will also feature Fed Chairman Powell as he testifies before Congress along with Treasury Secretary Yellen on the Covid relief efforts and the economy. Inflation and interest rates remain the hot topic of discussion and on Friday we'll get the personal consumption and expenditure data. These reports will include the PCE deflator, which is considered the Fed's preferred measure of inflation.

Have a great week!

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