Market Commentary — June 7, 2021

Markets traded moderately higher during last week’s shortened trading week. Energy shares performed the best within the S&P 500 as oil prices reached their highest level in 2 years. Consumer shares lagged, weighed down in part by the decline in Tesla.

The jobs report sent mixed signals about economic strength. The Labor Department reported that 559,000 jobs were added in May, which was below consensus estimates for 650,000. On a positive note, the unemployment rate fell more than expected from 6.1% to 5.8%. Those worried about inflation took note that average hourly wages rose 0.5%, representative of the tight labor market. Those that are working, are getting paid more!

Meme stock madness once again made headlines, with AMC the current posterchild, up more than 100% in a week and 2700% since its January low. For those not quite understanding this phenomenon, a meme stock is one that has gone “viral” drawing the attention of retail investors. The hype is not tied to company fundamentals, but rather interest is driven by social media posts and online forums on Reddit like WallStreetBets. Recent stock examples include AMC, Gamestop, and Blackberry.

And here’s something to think about, the NY Fed says it will begin selling its corporate bond ETFs starting June 7th, the first step in a nearly $14 billion corporate credit portfolio that helped bring order to the market when it became unhinged due to COVID worries. The Fed said its trading will be “gradual and orderly” but that is a lot of volume to fly under the radar and $8.6 billion of it is in corporate bond ETFs.

According to ETF.com, last week saw $1 billion in creates for US equity ETFs, a whopping $5.7 billion in international equity ETFs, and $2.8 billion in US fixed income. Not bad for a short week.

Why the surge in interest for international ETFs? Investors appear to bet that international shares will outperform US markets the remainder of the year. While international stock funds have trailed their U.S. counterparts for most of 2021, solid contributions from developed markets like Canada, France, Switzerland, and the UK helped reverse that trend in May.

We all have to tough it out for a full week next week – make it a good one!

Jane Edmondson
CEO and Co-Founder

Share this Market Commentary

About

EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.

Disclosure

The information provided on this page is for illustrative purposes only and is not intended to serve as investment advice. The information provided is as of particular time and subject to change at any time without notice.

It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. EQM Indexes does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. EQM Indexes Indices makes no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. EQM Indexes is not an investment advisor, and makes no representation regarding the advisability of investing in any such investment fund or other investment vehicle. A decision to invest in any such investment fund or other investment vehicle should not be made in reliance on any of the statements set forth in this article. Prospective investors are advised to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other vehicle. Inclusion of a security within an index is not a recommendation by EQM Indexes to buy, sell, or hold such security, nor is it considered to be investment advice.