The pace of vaccinations continues to accelerate across the country
A year ago, last week the World Health Organization officially decreed that the spread of the virus now known as COVID-19 had become a global pandemic. Life as we knew it changed.
The economy was placed in a medically related partial suspended state. Entire sectors were essentially turned off to stop the spread of the virus. Schools went virtual. Public transportation all but ceased. Live entertainment at large public venues stopped. In places where people gathered (e.g., grocery stores) masks and physical distancing were required. People of faith were not allowed to worship together. Families were discouraged from gathering beyond their nuclear pods.
It has been a stunning year and we continue to live with the virus and its invasion of our lives. However, we have made incredible progress in our battle with the coronavirus. Testing is robust. Treatment has improved. Hospitalizations are declining. Deaths are falling. Most importantly, we have several highly effective vaccines and they are getting distributed at an accelerating rate.
COVID-19 – The Numbers
Globally, across 213 countries and territories, there have been nearly 120 million confirmed cases and over 2.6 million deaths. In the United States, over 29 million have been infected and over 534,000 have died.
In the early days of the global health scare, the stock market experienced its fastest, most abrupt sell of in history. It was stunning. In just days (February 9 – March 15) the stock major indices were down by over 30%.
Then, as investors came to grips with the nature of the pandemic, the markets reversed. We witnessed the fastest recovery in U.S. stock market history. The major indices have repeatedly set new records over the past 12 months.
This past Friday, the Dow Jones Industrial Average rose by 293 points or 0.90%. The S&P500 index increased 4 points or 0.10%. The Nasdaq declined by 79 points or 0.59%.
For the week, the Dow rose 4.1%, the SP500 index increased 2.6% and the Nasdaq gained 3.1%.
Let’s look back at the past 12 months across the stock and bond markets.
The Dow Jones Industrial Average
The Dow set another record on Friday. Here’s a chart of the Dow over the last year.
The S&P 500 Index
The large cap stock index has the same profile over the same period.
The tech-heavy Nasdaq has labored over the past few weeks and is down from its all-time high. It had an incredible run. However, investors are beginning to rotate out of stocks that may be overvalued if interest rates rise. We are seeing a movement away from growth stocks to value stocks.
10 Year Treasury Note
Interest rates have been steadily rising. Friday the yield on the 10-year Treasury Note was 1.625%. Rising interest rates are an indication that the economy is strengthening and that inflationary pressure is building.
Spot gold traded at $1,726 on Friday, up 0.19%. Notice, however, that investors have been moving away from gold. This indicates that investors are leaving safe haven asset classes and taking on more risk.
West Texas Intermediate Crude futures for April 2021 delivery traded at $65.56 a barrel on Friday, down 0.70%. But oil is on the move upward. Another indication that the economy is recovering (Notice the massive sell off in April of last year).
Let’s take another look at the metrics for pandemic in the U.S.
The number of new cases of COVID-19 per day continues to drop. However, epidemiologists are concerned that we have leveled off at a level far above what it was in the spring of last year.
Johns Hopkins University provides the following graph of infections:
Source: Our World in Data
As the vaccination effort has ramped up, testing has fallen. The positive test rate continues to trend downward.
Source: Johns Hopkins University
The hospitalization rate is down significantly. But it is still above the levels experience last spring and summer. Hopefully, it will continue to trend downward.
Source: COVID Tracking Project
Health authorities are concerned that we continue to lose many lives each day to the virus.
Source: New York Times
The Institute for Health Metrics and Evaluation (IHME) at the University of Washington projects that a total of between 585,000 and 656,000 Americans will die from the virus by June 2021. The variance is driven by mask usage, vaccinations, and other containment strategies.
The rate of vaccinations continues to accelerate. Over 100 million vaccinations have been administered. President Biden has indicated that all Americans over the age of 18 should be able to receive a shot by May 1. It remains to be seen whether states will be able to deliver.
The Labor Market
The employment markets continue to heal, albeit slowly. The number of workers filing for unemployment benefits fell to 712,000 for the week ending March 7.
There are still 9.6 million jobs missing since the start of the pandemic. Some of these jobs are undoubtedly gone forever. However, many may be recovered as the economy recovers and grows.
Source: Trading Economics
In February, U.S. employers added 379,000 jobs. This is certainly encouraging. However, 20.1 million Americans are currently collecting some form of federal and/or state unemployment benefits.
The American Rescue Plan
Last week President Biden signed the $1.9 American Rescue Plan Act of 2021. We have written about this package several times over the past few weeks. You can find a summary of the plan on numerous websites. Here’s a visual summary:
Source: Tax Foundation
This is the sixth economic relief package passed since the beginning of the pandemic. Congress has now approved nearly $6 trillion in aid.
It is increasingly apparent that the United States is turning the corner on the pandemic. It has taken an incredible toll in lives and dollars. However, we are healing as a nation and the economy is poised for significant growth.
If we can corral the virus and its many mutations, we should be able to return to restaurants, gyms, entertainment venues, and public transportation in the second half of the year. Students will return to classrooms. Friends and family will gather once more. People of faith will worship together.
We remain available to support you any way we can.
Keep the faith, get vaccinated when you can, be safe, and stay healthy.
PLEASE SEE important disclosure information at www.springwaterwealth.com/blog-disclosure/.