Week in Review: August 9, 2021

Markets ended the week higher with the S&P 500 closing at a new record, aided in part by Friday’s strong employment report along with continued strong corporate earnings.

With July’s unemployment report out of the way and second quarter earnings wrapping up, all eyes will now be on the Federal Reserve ahead of its annual Jackson Hole meeting at the end of August. Before the Fed’s July meeting, investors had been hopeful that the central bank would provide greater insight into its tapering plans at the conclusion of its Jackson Hole meeting. However, Federal Reserve Chair Jerome Powell’s comments after the July meeting stating that the Fed will continue discussing its plans during “coming meetings” suggested that the Fed may not provide as much detail in August as investors would have liked.

The seven-day moving average for new coronavirus cases in the US surpassed 100K for the first time since February. While the surge has raised concerns about the economic recovery, currently, there is almost zero likelihood of new national restrictions to slow the spread in part because of limited appetite to do so, but also because nearly 70% of all adults have now received at least one vaccine dose. One silver lining of the recent surge has been a notable increase in vaccination rates in areas that previously lagged with the national average.

Through Friday, 89% of S&P 500 companies had reported second quarter earnings with 87% of those having beaten their consensus estimate. According to industry group Factset, S&P 500 earnings growth is currently on pace to increase 89% from 2Q20.