The S&P 500 Index lost 11 basis points last week after rising over 7% during the previous four straight weeks of gains. The index posted a new all-time closing high the previous Friday, April 16. Equities have continued to climb from their pandemic lows in March of 2020, as government stimulus, monetary policy, and COVID-19 vaccinations have contributed to their strength. This continued strength and new highs coupled with concerns over increasing valuations led to some of last week’s trading volatility as investors took profits early in the week. The sharpest move down came mid-day Thursday over news of a potential plan by the Biden administration to raise the capital gains tax rate to 39.6% on the wealthy, reaching a 43.4% tax with the inclusion of the Obamacare surtax. All sectors were down as the S&P 500 Index declined -0.91%, the largest one-day loss in over a month.
After a weak start to the year, throughout the month of April government Treasury price action has been generally strong. This contrasts with the generally rising yields that the market witnessed for the first three months of the year. Last week, treasuries enjoyed increasing price through the week before falling Friday. Corresponding to the pause in yields increasing, Gold has enjoyed strength in April and rose through last week before also falling on Friday. The Friday March New Single-Family Home sales report showed a huge increase of 20.7%. This represented a rise of 66.8% from the year prior. The average sales price of new homes sales was also recorded increasing 6.0% from the prior year. While Friday’s report was wildly positive, Thursday’s March Existing Home Sales data registered a decline of 3.7% from the prior month but still up 12.3% from the prior year.