April was a good month. While it started with what looked like another wave of infections, by month-end, we were back at recent lows for both case growth and positive test rates. Vaccinations have now hit a substantial part of the population, and that looks to have controlled the virus. The medical risks are still real, but they are now about whether and when we hit herd immunity, rather than whether we have a fourth wave. This is significant progress and means the medical risks are low and likely to decline further over the next month.

If the month of March was a turning point (and it was), the month of April demonstrated that March was not a fluke. The data showed we have really turned the corner in many ways. In April, the fourth wave of the pandemic started—and then fizzled out, resulting in much lower infection rates to end the month. Layoffs tumbled and consumer confidence rose to pre-pandemic levels. Markets rallied to all-time highs once again. In April, things got better across the board.

April was a good month for the markets. The S&P 500 and Nasdaq gained more than 5 percent, while the Dow was up almost 3 percent. These returns were driven, in part, by the medical news, with new case counts, hospitalizations, and deaths all down. While the medical risks declined, reopening accelerated. Job growth rose, and weekly layoffs dropped. Consumer confidence and spending also improved.

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. We’ve had good news on the medical front, as the fourth wave of the virus doesn’t seem to be gaining traction. Case counts and positive test rates are back to the lows we saw as the third wave subsided, and hospitalizations and death rates have improved. One potential problem is that vaccination rates have slowed, which we will need to keep an eye on.

As we approach the summer months, there are a lot of reasons for investors to be worried: inflation, taxes, the deficit, and on and on. I am hearing quite a bit about reasons not to be cheerful, some of which we’ve talked about in other posts. But because of where we are in the calendar, there is one more making the rounds—the old market chestnut “sell in May and go away”—that I want to talk about today. The short response to this adage, for readers in a hurry, is “don’t.”

I have had a number of questions recently about inflation and what that means for the Fed and interest rates. The general assumption seems to be that inflation is about to rise sharply and that the Fed will be forced to raise rates to control it, with the usual panoply of devastating side effects. The taper tantrum gets mentioned frequently, as when rates rose sharply and derailed stock markets after the Fed suggested it would tighten policy.

I spent last week down in the Florida Keys on vacation with my family. It was great. The weather was terrific, we went snorkeling and kayaking, and the place we stayed was very nice. Truly relaxing.

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. On the medical front, we’ve seen modest deterioration over the past two weeks. Case counts and positive test rates have risen steadily, while hospitalizations and death rates have stabilized or increased by less than case growth. But with vaccinations continuing at an accelerating pace—the trend is now at more than 3.3 million per day—the race between vaccinations and the virus continues.

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!!

Equity markets continued to rally in March, although a rise in long-term interest rates during the month led to some volatility, especially for growth and technology companies. The S&P 500 gained 4.38 percent, while the Dow Jones Industrial Average rose by 6.78 percent. The Nasdaq Composite's heavy technology weighting dragged down its performance, resulting in a gain of only 0.48 percent during the month. Despite the volatility, both the Dow and the S&P 500 ended the month close to all-time highs, and the Nasdaq has since bounced back. Markets remain in rally mode, although the risks are still significant.

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

The economic recovery continued to pick up steam in March, driven by public health improvements and the federal stimulus checks that reached bank accounts during the month. All of the major indicators we track in this piece showed improvement, with rising service sector and consumer confidence coinciding with faster job growth and a continued normalization of interest rates.