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.

Today's post is from Jim McAllister, director, equity research.

Last week saw a number of important economic updates, with a focus on March’s service sector confidence and producer inflation reports. Service sector confidence served as a highlight during the week, with the better-than-expected March report bringing the index to its highest level on record. This will be another busy week for updates, with a focus on March’s consumer inflation and retail sales reports and a look into consumer and home builder sentiment in April.

Two weeks ago, after several weeks of significant improvement, the medical news started to worsen as case growth and positive test rates ticked back up. Whether this situation might signal the start of another wave of infection growth was an open question. The good news is that the answer looks to be no. Case growth, while slightly above recent lows, has stayed steady despite the continued reopening of the economy and the increasing spread of more contagious variants of COVID-19. While the battle against the pandemic continues, vaccinations are also continuing. They should end up choking the virus off before it gets to a significant fourth wave. The medical risks are still real, but they are lower than they were two weeks ago, and they’re dropping every week.

“The number one problem in today’s generation and economy is the lack of financial literacy.” —Alan Greenspan

The first quarter looks to be the turning point, both for the pandemic here in the U.S. and for the economic damage it has caused. While risks still remain, especially in the short term, the significant progress we made in the first two months of the year started coming to fruition in March, signaling that we are through the worst of it.

Last week saw a number of important economic updates, with results largely coming in above economist estimates. Highlights included better-than-expected results for March’s consumer and business confidence surveys and a much-better-than-expected March jobs report. This will be another busy week for updates, with a focus on international trade, the minutes from the most recent Fed meeting, and a look at producer inflation in March.

In March, we saw a strong end to a healthy first quarter for stock markets. Both the Dow and S&P 500 here in the U.S. showed gains, while developed markets abroad showed lower but still positive returns. We also had good news on the economic front. Hiring rebounded, layoffs dropped, and consumer confidence rose to post-pandemic highs.