Weekly Market Recap

The events in Kabul notwithstanding, there were two things that moved markets last week: the FDA’s approval of Pfizer’s vaccine (and the quick reaction from companies and government agencies in terms of vaccine mandate announcements), and Jerome Powell’s speech at Jackson Hole on Friday where he threaded the needle almost perfectly regarding the status of the Fed’s dual mandate, asset purchase tapering, and rates.

Kabul notwithstanding, there were two events that moved markets last week:

* On Monday, the FDA gave official approval for Pfizer’s covid-19 vaccine. In response to this development, many companies and government agencies announced vaccine mandates, a step that should help raise vaccination rates nationally and reduce the spread of the virus.

* On Friday, Fed Chairman Jerome Powell successfully walked the line in his Jackson Hole speech, acknowledging that progress had been made towards full employment, expressing the view that longer-term inflation risks are manageable, teeing up asset purchase tapering to begin later this year, and underscoring that tapering does not start a ticking clock on a rate hiking cycle.

Stock investors responded favorably. Cyclicals and small/mid caps led the rally, while the S&P 500 and Nasdaq both finished the week at record highs. Notably, this was the 52nd record closing high in the S&P 500 so far in 2021.

International stocks were better as well, led by a rebound in China following the eradication of local virus transmission after a month of lockdowns.

Treasury yields finished higher on the week, although they retraced part of this move after Jerome Powell’s speech on Friday. Credit spreads tightened.

Oil was a major beneficiary of the cyclical rally, closing higher by nearly $6.50 on the week. Other commodities were higher as well. The US dollar weakened.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group