Market Review - March 2021
Source: Zephyr Style Advisor
US stocks ended the month with strong gains of 4.4% despite a constant tug-of-war between optimism about the economic recovery and fears about rising interest rates and inflation. Small-cap stocks, which have led the market for the past several months, lagged broad markets, with the Russell 2000 index gaining 1.0%. Finally, international stocks lagged US stocks with developed markets finishing ahead of emerging markets. Higher US interest rates and a resilient US dollar has led investors to safer shores, a trend that’s clearly hurting emerging-market equities.
All sectors within the S&P 500 were positive during the month. Utilities was the best-performing sector this month, up 10.5% a sharp reversal from being the worst performer in the prior month. Technology was the worst performer in March up 1.7%. Across style, value stocks, which tend to be more economically sensitive, have outperformed growth stocks, which include sectors like technology, for the month and year as the market appears to have moved on from the stay-at-home technology stock theme of 2020 at least for now.
The major bond indexes had another negative month as investors feared inflation may eat into the value of their bonds. The yield on the 10-year Treasury note ended the month at 1.74%, up from 1.44% at the start of the month. While most bonds struggled, high yield bonds were the one notable exception with gains of 0.1% and 0.8% for the month and year respectively.
Gold once again fell -0.9% as the global economic recovery showed improvement and the US dollar strengthened 2.4%. The strength in the US dollar proved to be a headwind for commodities as it fell 2.1% following a streak of gains over the last few months. US REITs posted strong gains, up 5.5% as economic reopening continue to take stronghold.
Relative to a globally balanced (60/40) equity/bond index, allocations to US REITS and global equities helped, while global bonds, commodities, and gold hurt for the month.
Source: Zephyr Style Advisor
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