April 2021 Market Performance

Key Points – April 2021 Market Performance

April market performance
Year to date market performance
Overvalued markets
Outlook for 2021 and beyond
3 minute read | 5 minutes to watch

Today I’ll review what happened in the markets during April. We saw some good things across the board. More importantly, however, we’re going to talk about what we see coming for the balance of this year.

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April 2021 Market Performance

Figure 1 | Source: Chaikin Analytics

So let’s start with a quick look at the market. As you can see in Figure 1, the NASDAQ was our number one performer for April, up 7.53%. SLY, a small cap, was only up by 2.26%. If we look at April overall, it was positive across the board.

Market Performance 2021 Through April

Figure 2 | Source: Chaikin Analytics

Let’s look at 2021 on a year-to-date basis in Figure 2. Our small cap and mid cap have taken the lead, up 20.19% and 18.26%.

NASDAQ is the laggard year to date, just up 7.73%. Now in any normal year, you’d say, “Well, 7.73% year-t0-date through April? Those are some pretty darn good numbers!” I would agree with you.

The S&P 500 up 11.61% year-to-date. The Dow Jones Industrial Average is up 10.84%. So on a year-to-date basis, the small caps continue to perform.

Overvalued Markets

Now, we’ve talked in the last couple of months about how the markets are overvalued. If you look at the markets from a price to earnings ratio, you would still argue that the markets are overvalued.

I’ve had many questions coming my way, as have many of our CERTIFIED FINANCIAL PLANNER® professionals here at Modern Wealth Management. How long can this really last? So let’s address that question.

How Long Can the Overvalued Market Last?

Obviously, we had the global pandemic, and with some of the things that we see today, the chances of obstacles being in the way due to the pandemic day by day continue to wane.

So, the consumer has a position right now where they are really ready to spin. Let me review a few numbers with you.

By the Numbers

Housing Starts

Housing starts are off the charts and are looking unbelievable. There is far more demand than there is supply, and that will continue to force new construction. And that new construction, as you know, leaks into all kinds of different sectors of the economy.

Retail Sales

Retail sales are looking really strong.

What About inflation?

Inflation, that’s a big question we’re getting. Inflation, what’s going to happen with inflation? What our indicators are showing us right now is that we are going to continue to see some price acceleration.

I don’t want to go off of Jerome Powell’s speech and just say, “Hey, it’s going to be temporary.” But what it looks like is the price acceleration that we’ve been seeing should peak out by sometime mid-summer. We should see the price acceleration start to slow once we pass mid-summer.

Non-Defense Spending

Non-defense spending in the first quarter of this year was up by 9.7%, which is good. We’ve had some problems with the supply chain, and the issues with the supply chain are twofold.

We have companies, businesses, and industries trying to replenish their low inventory due to the lack of production caused by COVID.
Demand is incredibly high right now. There is a ton of demand.

Outlook for 2021 and Beyond

We have a really positive and strong outlook for the balance of this year. We should see accelerating growth in the economy. 2022 at this point still looks strong, and so does 2023.

All of the leading indicators today tell us that, from an economic perspective, we should continue to see good things.

Now remember, just because we have a strong economy, that doesn’t mean that it’s always just smooth sailing for the market.

It’s critical to be in contact with your financial advisor to talk to them about your risk tolerance and objectives. Then review your overall financial plan to ensure your investment portfolio is as it should be for you.

I hope this helps. I appreciate you joining me for the Monthly Economic Update.

Dean Barber Founder & CEO

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