This week delivered some temporary relief from the tech selloff, additional optimistic news regarding the COVID vaccines, and another piece of encouraging economic data. While this is all good news, it does not mean that the markets will remain immune from volatility. Concerns about future inflation persist, and the ongoing rotation back toward cyclical names is still occurring. That said, near-term indicators reflect a stable, relatively healthy market.
Growth vs. Value – Last week’s tech selloff, which was induced by inflationary fears, may be part of a broader trend, as value stocks continue to come back into favor. The last time value stocks were more favored than growth stocks was in 2014, and since that time growth stocks have significantly outpaced their counterparts. Recently, the market has begun to rotate, and many value names are becoming more desirable. This rotation, paired with the more attractive prices of many value names, offers some attractive opportunities for investors.
CDC Vaccine Update – The Center for Disease Control announced that people who are two weeks past their final shot face little risk if they visit indoors with unvaccinated members of a single household. The social ramifications of this announcement are huge, as it will allow many individuals to see family and friends for the first time in months. Additionally, every positive vaccine-related announcement adds to public confidence, which should only continue to bolster economic growth and consumer confidence.
Household Wealth – The Federal Reserve released Q4 information on U.S. Household Wealth, with combined household wealth growing 10.1% last year to $130.2 trillion. This growth was driven in large part by surging stock and home prices after interest rates were lowered to combat the financial fallout of the pandemic. Increasing household wealth, friendly fiscal policy, and pent-up consumer demand paint an optimistic picture for a re-opening economy moving forward.
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Investment advice offered through Strauss Financial Group, Inc., a Registered Investment Advisor.
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