March Investment Bulletin

Bill Norris

March 04, 2021

Stay current on what’s happening in the economy to help you better understand how the financial news relates to your investments.

February key drivers

Despite the selloff in global equities towards the end of February, which was sparked by rising interest rates, markets for the most part moved higher during the month. The S&P 500 posted a  gain of over 2.7%, while small cap stocks, as measured by the Russell 2000 index, gained over 6%, reflecting the optimism of a re-opening of the US economy in the future. Rates in the US also moved higher, and the yield on the 10-Year treasury note closed at 1.4%—up over 30 basis points from the beginning of the month.

For much of the month, the focus for investors was on the future state of the economy in the US and abroad. With daily COVID-19 data suggesting an easing in the recent surge coupled with the House approving the Biden fiscal relief package, optimism continued to improve, especially as more people were vaccinated. Consumer confidence, personal spending and durable goods orders have been trending higher recently.

For the most part, the Q4 earnings season for S&P 500 companies wrapped up with better-than-anticipated results for both sales and earnings per share growth. According to Strategas Securities, sales growth in Q4 turned positive, while earnings, which had been expected to contract, ended up growing by more than 4% in the quarter led by the Financial, Material and Technology sectors. Earnings performance is helping to reduce some of the valuation extremes investors have been concerned about recently.

What to watch in March

With expectations of state mandated restrictions easing and the economy slowly starting to open back up, investors will likely want to watch the rates markets to see if higher rates continue to put pressure on stocks. We should expect to see some higher levels in yields with stronger economic growth being factored into the bond market. However, it is not just higher rates that tend to impact stocks, but also the speed in which they move higher. Inflation expectations have also begun to move higher over the past month, adding an additional headwind to equities.

With Johnson & Johnson receiving FDA emergency approval for its COVID-19 vaccine, the number of people getting access to vaccines should increase in March, leading us closer to broader immunity. Production of the Pfizer and Moderna vaccines is expected to ramp up, so we could see more states lower their age restrictions, making these vaccines more readily available to a much wider portion of the US population.

Green shoots in spring? Not only will we see an increase in vaccinations, but we also expect the Biden COVID-19 relief bill to be passed by Congress, setting the stage for additional monetary support for individuals, families, small business and municipalities. Personal incomes and spending have been boosted by previous stimulus checks, and the next round could be the largest one yet.

Global asset class total returns through 02.28.2021


Bill Norris is chief investment officer and head of asset management for CIBC Bank USA. In this role, he oversees investment management, trust and estate services to individual and institutional clients of CIBC Bank USA. Bill also serves as a member of CIBC Private Wealth Management’s Asset Allocation Committee with more than 35 years of industry experience.