Our 2021 Midyear Market Update

Our 2021 Midyear Market Update

| June 11, 2021
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Although it felt as though 2020 would never end, we’re already halfway through 2021, believe it or not! After our lives were turned upside down by the coronavirus, most of us looked to 2021 with some trepidation. Would it be filled with more restrictions, more confusion, more volatility? 

We all hoped 2021 would bring a return to normalcy (or something like it), and it finally seems as though we are on our way to putting COVID-19 behind us. Now is the perfect time to take stock of what’s happened so far in 2021 as we continue recovering—emotionally and economically—from the pandemic. 

Stock Market Performance

As vaccine rollouts have allowed many businesses to return to normal, some experts believe we may be entering a booming economy. (1) Stock market performance has been mildly volatile in the first half of this year with an overall trend toward growth. The S&P 500 reached its highest level this year on May 7, with a year-to-date return of 14% as of June 4. (2) The Dow Jones has also shown overall growth this year and is up 15% as of June 4. (3)

Meanwhile, the NASDAQ has shown greater volatility with a yearly low of -2.17% in early March, up to 9.7% at the end of April, and ending at 8.79% as of June 4. (4) Many experts have warned that while they are optimistic about market performance in 2021, that performance will likely be riddled with volatility throughout 2021 and in the coming years. (5)

A Shaky Return To Normal Employment Levels

It has been generally expected that as businesses reopen to full capacity, the number of unemployment claims and levels of unemployment will return to normal. As many of us have seen in the news, however, this is currently not the case. (6) Along with other businesses in the hospitality industry, restaurants are especially struggling to replace their workers and remain understaffed in the face of increasing demand from consumers.

Some commentators believe workers are reluctant to return to work because of continued unemployment assistance from federal and state governments. Others argue that many workers are unable to return to work yet because they are still wary of the coronavirus, are unable to find affordable childcare, or now have the time to look for more stable, higher-paying work outside of the hospitality industry. 

Whatever the reason for the worker shortage, worker benefits and wages may undergo drastic changes in 2021 and beyond as the economy returns to normal. In any case, getting workers back into the workforce remains a key component of the U.S. recovery plan.

Interest Rates & The Federal Reserve

Interest rates continue to remain low, as the Federal Reserve has promised. In an effort to encourage consumers to keep borrowing, the Fed has kept interest rates near zero since the onset of the pandemic. They have stated they will likely not raise rates again until 2023, when it is more likely that inflation rates will reach desired targets. (7)

For now, the near-zero interest rates may be attracting first-time homebuyers who have been able to weather the economic pressures from the pandemic. However, home prices have surged 13.2% over the past year, (8) igniting some fears that a housing bubble may be looming.

How Should You Respond?

The global pandemic reminded us (rather harshly) that we cannot predict the future and we really have little control over anything, including what work, school, and even family time looks like. Among the valuable life lessons learned is that having a strong financial plan in place can help when disaster strikes. 

Although we’ve always known market performance is impossible to predict with accuracy, 2020 and 2021 taught us that market performance may be impossible to predict at all. No one knows what the future holds, but don’t let that prevent you from taking the steps to protect yourself and pursue financial freedom. 

Now more than ever it’s critical to make wise financial decisions that give you confidence about your future and move you toward your goals. Our HBA Wealth team specializes in helping our clients reach financial independence using sound financial strategies that align day-to-day decisions with a long-term financial plan. If you’d like to see how we can help you, contact us at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.

About Haydel, Biel & Associates

Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.

The commentary on this blog/website reflects the personal opinions, viewpoints and analyses of the Haydel Biel & Associates employees providing such comments, and should not be regarded as a description of advisory services provided by  Haydel Biel & Associates or performance returns of any Haydel Biel & Associates Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Haydel Biel & Associates manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

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(1) https://www.cnbc.com/2021/04/09/the-economy-is-on-the-cusp-of-a-major-boom-and-economists-believe-it-could-last.html 

(2) https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2ahUKEwjI5a-z8oDxAhWbXc0KHQ2PCWYQ3ecFMAB6BAgiEBo&window=YTD

(3) https://www.google.com/finance/quote/.DJI:INDEXDJX?window=YTD

(4) https://www.google.com/finance/quote/.IXIC:INDEXNASDAQ?window=YTD

(5) https://www.morganstanley.com/ideas/stock-market-outlook-2021 

(6) https://thehill.com/policy/finance/economy/556235-chamber-of-commerce-worker-shortage-crisis-deepening 

(7) https://apnews.com/article/fed-expects-key-rates-near-zero-through-2023-9b9a335a1ce05d69fc97a1d6197371ab#:~:text=WASHINGTON%20(AP)%20%E2%80%94%20The%20Federal,markets%20about%20potentially%20higher%20inflation

(8) https://www.carsonwealth.com/insights/market-commentary/market-commentary-home-prices-surge-over-previous-year-disposable-income-dips/

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