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Our 2021 Midyear Market Update Thumbnail

Our 2021 Midyear Market Update

Nathan Shelton

By Nathan Shelton

2020 was a major reality check. We cannot predict the future and we have little control over anything. Even things we have always taken for granted were called into question, such as school for our children and time with loved ones. Saying that we all entered 2021 with some trepidation would be an understatement. Would it bring more restrictions, more confusion, more volatility?

Although we didn’t know what to expect, the year is half over (believe it or not), and it seems as though we’re on our way to finally putting COVID-19 behind us. June is the perfect time to take stock of what’s happened so far in 2021 as we continue recovering—emotionally and economically—from the pandemic. 

Stock Market Performance

As vaccine rollouts have allowed many businesses to return to normal, some experts believe we may be entering a booming economy. (1) Stock market performance has been mildly volatile in the first half of this year with an overall trend toward growth. The S&P 500 reached its highest level this year on May 7, with a year-to-date return of 14% as of June 4. (2) The Dow Jones has also shown overall growth this year and is up 15% as of June 4. (3)

Meanwhile, the NASDAQ has shown greater volatility with a yearly low of -2.17% in early March, up to 9.7% at the end of April, and ending at 8.79% as of June 4. (4) Many experts have warned that while they are optimistic about market performance in 2021, that performance will likely be riddled with volatility throughout 2021 and in the coming years. (5)

A Shaky Return To Normal Employment Levels

It has been generally expected that as businesses reopen to full capacity, the number of unemployment claims and levels of unemployment will return to normal. As many of us have seen in the news, however, this is currently not the case. (6) Along with other businesses in the hospitality industry, restaurants are especially struggling to replace their workers and remain understaffed in the face of increasing demand from consumers.

Some commentators believe workers are reluctant to return to work because of continued unemployment assistance from federal and state governments. Others argue that many workers are unable to return to work yet because they are still wary of the coronavirus, are unable to find affordable childcare, or now have the time to look for more stable, higher-paying work outside of the hospitality industry.

Whatever the reason for the worker shortage, worker benefits and wages may undergo drastic changes in 2021 and beyond as the economy returns to normal. In any case, getting workers back into the workforce remains a key component of the U.S. recovery plan.

Interest Rates & The Federal Reserve

Interest rates continue to remain low, as the Federal Reserve has promised. In an effort to encourage consumers to keep borrowing, the Fed has kept interest rates near zero since the onset of the pandemic. They have stated they will likely not raise rates again until 2023, when it is more likely that inflation rates will reach desired targets. (7)

For now, the near-zero interest rates may be attracting first-time homebuyers who have been able to weather the economic pressures from the pandemic. However, home prices have surged 13.2% over the past year, (8) igniting some fears that a housing bubble may be looming.

How Should You Respond?

We’ve always known that market performance is impossible to predict with accuracy, but 2020 and 2021 taught us that market performance may be impossible to predict at all. The reality is that no one knows what lies ahead, but that shouldn’t prevent us from taking steps to protect ourselves and pursue financial freedom.

Your life doesn’t stay static; neither should your financial plan. Life happens and seasons change, and your plan must keep up. Now more than ever, it’s important to have confidence that the financial decisions you’re making are moving you toward your goals. At Shelton Financial Group, we specialize in helping our clients reach financial independence using sound financial strategies that align your day-to-day decisions with your long-term financial plan. If you’d like to see how we can help you, reach out to us at 260-436-7006 or schedule your free 30-minute Fit Call online. We look forward to hearing from you soon!

About Shelton Financial Group

Shelton Financial Group is an independent, multi-generational firm in North East Indiana that takes a team approach to addressing their clients most pressing financial concerns. SFG was founded in 1996 with the mission of helping people enjoy their wealth. Using their proprietary “One Life Formula,” the team at SFG focuses on what matters most to their clients and what they can control, integrating their wealth management needs with other aspects of their financial picture. To learn more about Shelton Financial Group and how they can help you achieve financial independence, visit them online.

The information expressed herein is obtained from sources that are believed to be credible, however, their accuracy cannot be guaranteed. All data is created from publicly available information and has not been independently verified by USA Financial.

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(1) https://www.cnbc.com/2021/04/09/the-economy-is-on-the-cusp-of-a-major-boom-and-economists-believe-it-could-last.html 
(2) https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2ahUKEwjI5a-z8oDxAhWbXc0KHQ2PCWYQ3ecFMAB6BAgiEBo&window=YTD
(3) https://www.google.com/finance/quote/.DJI:INDEXDJX?window=YTD
(4) https://www.google.com/finance/quote/.IXIC:INDEXNASDAQ?window=YTD 
(5) https://www.morganstanley.com/ideas/stock-market-outlook-2021 
(6) https://thehill.com/policy/finance/economy/556235-chamber-of-commerce-worker-shortage-crisis-deepening 
(7) https://apnews.com/article/fed-expects-key-rates-near-zero-through-2023-9b9a335a1ce05d69fc97a1d6197371ab#:~:text=WASHINGTON%20(AP)%20%E2%80%94%20The%20Federal,markets%20about%20potentially%20higher%20inflation
(8) https://www.carsonwealth.com/insights/market-commentary/market-commentary-home-prices-surge-over-previous-year-disposable-income-dips/