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Weekly Market Update for May 28, 2021

by Jim Ulland

The economy and the market seemed to start the Memorial Day weekend about five days early.  In a word, the week was quiet.  The market was generally positive.  Congress played nice as it tries to find a compromise over the infrastructure bill.  The Fed sent speakers out saying the upswing in prices was temporary, but if it persisted, they would talk about doing something, like raise interest rates.  They did not spook the market.  Interest rates fell.

The Nasdaq closed the week 2.06% higher as it tries to catch up to better performance so far this year in both the DOW and the S&P 500, which was up 1.16% this week. The Nasdaq substantially out-performed other indices in 2020. High-flying commodities gave back some of their price increases, but shortages were still in the news.  Auto production was slowed by the lack of semiconductor chips.  Housing was hampered by the high prices of lumber and shortages all through their supplier pipelines. Energy moved higher as production and distribution had trouble getting back to normal.  In some spots, gasoline hit $3/gal.

The labor market continued to be tight.  Fewer filed for unemployment, the lowest number since mid-March of 2020.  Employers are offering more, yet almost ten million jobs remain open.  A hot economy with a tight labor market does not need the additional stimulus from a big infrastructure bill, but it seems we are destined to have one.  Fortunately, the spending will be spread over seven to ten years.

Government agencies and health departments have taken Memorial Day as a target to reduce mask wearing and other Covid restrictions.  A woman in Ohio won $1 million in a lottery for getting vaccinated.  The vaccination march continues and now the talk of herd immunity is frequent.  As businesses reopen and school children are assured of in-person learning next September, there is more fuel for the recovery.  We feel stocks will rise more as the recovery rolls on.  Expect volatility along the way.  60% to 70% of the economy is based on consumer spending.  One indicator of consumer spending is the Personal Consumption Index.  That index came in at the second highest level since 1981.

An interest rate increase could put a chill on the recovery, but the Fed is giving no indication of action this year.  Thus, the market keeps moving higher.  Monday the S&P 500 was up +0.99%, Tuesday -0.21%, Wednesday +0.19%, Thursday +0.12%, and Friday +0.08%.

Next week there will be a lot of discussion of the President’s budget proposal, which calls for a 25% increase in spending and more taxes.  This is not the policy direction the market welcomes.  But let’s leave that until next week.  Everyone deserves this break for Memorial Day.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.


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