Broker Check

The Second Half of March (2021)

April 05, 2021
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The Federal Reserve met on the 16th and 17th of March. Their primary mandate is to promote a strong U.S. economy and a key tool is keeping inflation in check. After their meeting, they reaffirmed their commitment to avoid making any changes to their accommodative policies or interest rates. In fact, they do not expect any policy interest rate hikes through the year 2023. 
 
Despite the Fed’s announcement, the markets continue to fret over interest rates. The Fed did acknowledge that interest rates may slightly overshoot its 2% target briefly, especially if GDP grows by a scorching 6.5% (as was recently projected.) However, with unemployment still looming large, the Fed it hesitant to raise rates.
 
Stocks see-sawed their way through the second half of March. As of the 31st, the Dow was up 203 points (0.62%) and the S&P 500 posted a gain of 30 points (0.75%). The NASDAQ lost 73 points (0.55%). 
 
March 31st also marked the end of the first quarter, which proved to be positive for all major markets. The Dow closed the quarter 2,930 points up (9.69%), the S&P 500 gained 319 points (8.63%) and the NASDAQ posted a gain of 782 points (6.16%). 
 
Looking forward, markets will likely continue to react to inflation and interest rate projections. Evidence of rising interest rates could impact both stock and bond markets. Signs of stable rates could propel more gains. Overall the markets remain optimistic over continued job creation and economic recovery.