May 11, 2021 | Investment Review

Investment Review - May 2021

  1. The major U.S. equity indices all posted strong gains in the month of April. The Nasdaq Composite increased 5.4%, the S&P 500 added 5.3%, and the Dow Jones Industrial Average rose 2.8%. A combination of robust economic reports, broader vaccinations, and a healthy start to the corporate earnings season led to the positive returns.

  2. Corporate revenues and earnings continue to come in better than expected. Overall, 88% of the companies in the S&P 500 have reported first quarter results. Of these companies, 76% reported revenues ahead of expectations, in aggregate by 3.7%. Eighty-six percent have reported EPS above consensus estimates, in aggregate by 22.1%. Analysts are projecting double-digit earnings growth for the remaining three quarters of 2021.

  3. While interest rates remain low in absolute terms, they rose significantly during the first three months of the year. Specifically, the yield on the 10-year U.S. Treasury Note increased from 0.92% at the end of 2020 to 1.74% at the end of March. The sharp rise was in response to the massive stimulus bill and the potential inflation implications. Subsequently, the yield declined in April, ending the month at 1.63%.

Sources: Bloomberg, FACTSET, WSJ, U.S. BEA, U.S. BLS, Federal Reserve, Instit. For Supply Mgmt, ISI, IBD, Yardeni Research

Disclosure: This commentary reflects the opinions of Welch & Forbes based on information that we believe to be reliable. It is intended for informational purposes only, and not to suggest any specific performance or results, nor should it be considered investment, financial, tax or other professional advice. It is not an offer or solicitation.

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