Saturday, April 10, 2021

Global Market Square

By on April 6, 2021

The U.S. stock market fell slightly Tuesday, following a record-breaking session Monday. Additionally, the European stock markets ended its session higher as the stock rotation took over the markets. Investors are buying value stocks, or those impacted by the pandemic.

The International Monetary Fund upgraded its global growth forecast, and the new projections are for global GDP to reach 6% in 2021, then cascading down to 4.4% for 2022. The lofty revision is a reflection of the significant fiscal stimulus in most large economies. However, there are very troublesome uncertainties that may follow this revised outlook such as the direction that the pandemic may take, the massive vaccination efforts and the job market’s growth.

We must point out the earnings season begins the week of April 12, with bank holding companies leading the parade. Analysts expect S&P 500 company earnings will grow 25% in 2021. There will also be plenty of companies with much better than expected earnings growth taking a cue from the stronger than forecast economic recovery.

As we predicted, discussion of President Biden’s proposal will take Washington by storm, with Democrats beginning to argue that moderate Democrats would favor a 25% corporate tax rate instead of the higher 28% proposed by Biden to finance the $2 trillion infrastructure plan. 

Suppose the president’s infrastructure plan comes to pass, the infrastructure proposal can boost long-term economic growth; however, its passage depends on not raising the corporate tax rate to a level that impacts investment.

Wall Street summary for April 6, 2021,

  • The Dow Jones Industrial Average closed at 33,430.24, down 96.95 points, or 0.29%.
  • The Standard & Poor’s 500 closed at 4,073.94, down 3.97 points, or 0.10%.
  • The Nasdaq Composite Index closed at 13,698.38, down 7.21 points, or 0.05%.
  • The Birling Capital Puerto Rico Stock Index closed at 2,460.13, up 20.99 points, or 0.86%.
  • The U.S. Treasury 10-year note closed at 1.67%
  • The U.S. Treasury 2-year note closed at 0.16%.