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HERE ARE THE LATEST trends in the world of investing:

  • The S&P 500 climbed 5.8% in 2021’s first quarter, adding to 2020’s 16.3% gain. These figures don’t include dividends. Despite the handsome stock market performance of the past dozen years, the shares in the S&P 500 remain just 160.1% above their March 24, 2000, peak—a modest gain over a turbulent two-decade stretch.
  • Amid 2021’s healthy first quarter return, we saw a change in market leadership. After years of disappointing performance, U.S. value stocks fared better than growth, while small company stocks outpaced large-caps. Developed foreign markets and emerging markets, however, once again lagged behind U.S. shares, in part because the dollar rose in the currency markets late in the quarter, trimming gains for U.S. investors who own foreign stocks.
  • Treasury bond yields almost doubled in 2021’s first quarter, with the benchmark 10-year Treasury note yielding 1.74% as of March 31, up from 0.92% three months earlier. That meant stinging losses for those in longer-term bonds. In early August 2020, the 10-year yield hit a record low of 0.52%.
  • The Federal Reserve slashed short-term interest rates in 2020, as it sought to prop up the slumping economy, and continues to keep them at rock-bottom levels. One consequence: One-year Treasury bills were yielding just 0.06% as of March 31.
  • Real assets had mixed performance in 2021’s first quarter. Oil prices stood at $59 a barrel on March 31, up from $48 at year-end 2020. Real estate investment trusts posted healthy gains in the first quarter, despite rising interest rates. But during 2021’s first three months, gold slid to $1,709 from $1,902 at year-end 2020.
  • In June, the Federal Reserve projected that the U.S. economy would grow 7% in 2021, after shrinking 3.5% in 2020. What about unemployment? The Fed expects it to finish 2021 at 4.5%, while core inflation runs at 3%.
  • As of 2019, 52.6% of U.S. families were invested in the stock market, up from 51.9% three years earlier, but below the 53.2% peak recorded in 2007, according to the Federal Reserve’s Survey of Consumer Finances. The survey is conducted every three years.

Want to get a handle on stock and bond market valuations? Check out the chapter on financial markets.

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