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 rebounded in February despite some late-month volatility driven by a spike in U.S. interest rates. The S&P 500 gained 2.76 percent, while the Dow Jones Industrial Average rose by 3.43 percent. Riskier assets were hit hardest by the volatility at month-end, and the technology-weighted Nasdaq Composite gained 1.01 percent. Despite the overall positive results, the month-end volatility served as a reminder of the potential risks markets still face.

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 picked up speed in February, driven by public health improvements and the federal stimulus checks that reached bank accounts. We saw a positive turnaround in consumer confidence and spending figures, along with an acceleration in hiring. We also saw signs of continuing normalization of long-term interest rates, which is a positive signal that the economic recovery remains on track.

This morning, we got some very good news about the recovery. The headline number of the jobs report, with 379,000 jobs created, was excellent—and almost double the expected 200,000. This is good news. When you look into the details, the news is even better. Clearly, the reopenings around the country have made a big difference in the job market. Looking forward, that trend will give us a real tailwind as vaccinations accelerate.

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. On the medical front, the stats have been getting better for the past two months, with case growth and hospitalizations down. That’s the good news. The bad news is that we are now at levels we saw at the peak of the second wave. And with some states starting to reopen and ending mandatory mask wearing, there are real things to worry about in the months ahead.

February looks to have been the start of our recovery from the pandemic. The medical news improved markedly, and the vaccination deployment finally got traction. Consumer confidence and spending turned around, and business investment continued to improve. Markets moved up. It was a good month all around. While some areas of concern became apparent at month-end, the progress was real—and significant.

Markets climbed in February, although they faced some turbulence on a spike in interest rates. While markets were choppy, the medical news improved. New cases and hospitalizations dropped, and vaccinations more than doubled. On the economic front, unemployment remains high, but companies are hiring again. Plus, stimulus payments hit bank accounts, and consumer confidence is moving up.

We have had some turbulence in the market over the past couple of days. The bond market briefly seized up, with interest rates up by surprising amounts. This, in turn, shook the stock market, taking it down from the highs by about 4 percent for the S&P 500 and almost 8 percent for the Nasdaq. On top of all that, we have had events such as the ongoing GameStop show and the explosion of SPAC offerings. With everything that is going on, the recent pullback, and the signs of frenzy, is it time to worry? My take: not yet.

*I will be alternating the text and video versions of this update on a weekly basis. This week is text, next week will be video, and so forth. As always, thanks for reading and watching.

I am sitting down with an advisor and a client this afternoon to discuss a portfolio. Usual enough. But in this case, the portfolio looks a bit different. It has a large number of individual stocks, most of which are in the tech space. Of course, it has done very well over the past year or more.

One of the most common types of questions I have gotten recently has been around interest rates. Rates are going up, and the concern has largely been whether this is a sign of pending inflation. As both my colleague Anu Gaggar and I have written recently, the answer is no, higher rates do not mean inflation is coming. They do mean several other things, however—some bad and some good.