Client resources & news, continued
March 2, 2021
Overall Market Lower
The Week on Wall Street
Stocks dropped amid rising long-term bond yields, with sharp declines in high-valuation growth stocks leading the overall market lower.

Rising Rates Derail Stocks
The 10-year Treasury yield climbed last week, from 1.34% to 1.42%, sending shudders through the stock market. While investors generally understand that economic strength may lead to higher bond yields, it was the speed at which bond yields rose that proved unsettling. Generally, when yields rise, bond prices tend to fall.1

Rising yields also drove sector rotation, with economic reopening stocks (e.g., energy, financials, and industrials) outperforming stay-at-home stocks, especially many of the big technology names.

The trend of higher yields was mitigated by testimony on Tuesday and Wednesday by Fed Chair Jerome Powell. He provided some assurances that the Fed remained committed to its current easy money policy stance.2

A surge in yields on Thursday, however, sparked a new wave of anxiety and a broad retreat that left market averages lower for the week.

Powell Testimony Calms Investors
Concerns over rising long-term bond yields and inflationary pressures were eased by two days of testimony by Fed Chair Powell. Powell reiterated the Fed’s intention to stick with its near-zero short-term interest rate policy and monthly bond purchase program until the labor market fully recovers and its inflation goals are met.

Powell dismissed market fears of accelerating inflation, noting that he did not see inflation reaching any troubling levels, declaring that any increase would be modest and transitory. He added that the Fed would likely allow inflation to spend some time above its 2% target rate. Inflation for the past eight years straight has been below that target.2

[1] U.S. Department of the Treasury, February 26, 2021
[2] The Wall Street Journal, February 24, 2021
The Dig
Movie Review by Bob Blattel
The Dig (2021) is a compelling and emotional period piece set against the backdrop of WWII, focusing on the true story of an amateur archaeologist who makes a surprising discovery in England.

Landowner Edith (Carey Mulligan) asks Basil (Ralph Fiennes) to consult on the project. After the dig starts, other interested parties try to take over, but everyone is racing with the clock to safely excavate the land before WWII takes its toll. And so the story moves steadily along and never seems to drag.

The acting, directing, and writing are excellent and I think this film might (finally!) win Ralph Fiennes an Oscar. His character of Basil makes for an interesting character study. This film is more engaging than I expected, and the conclusion is both wonderful and a little confusing.

Grab your popcorn and enjoy!
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