The Stock Market: Even More New Historic Highs

Mar. 28, 2021 12:28 PM ETBAC, C9 Comments
John M. Mason profile picture
John M. Mason
16.11K Followers

Summary

  • By the end of the week, the stock market had recovered what they lost earlier in the week and even closed at new historic highs.
  • Analysts looked around to find narratives that would justify the higher stock prices, but nothing seems to be as important as the policy actions of the Federal Reserve and Congress.
  • The leadership in the Federal Reserve and in the federal government seem intent upon, if anything, erring on the side of too much stimulus than too little.
  • This should continue to be positive for the stock market in 2021, but investors must realize where the market value is being created and it is not coming just from the individual companies.

Didn’t look like it was going to happen this week... but, it did.

The Dow Jones Industrial Average and the Standard & Poor’s Stock Index both closed at new historical highs on Friday. The Dow closed at 33,072.88 up 0.2 percent from the previous high of 33,015.37 achieved on March 17, and the S&P closed at 3,974.54, up 0.01 percent from its close on March 17.

Joe Wallace and Gunjan Banerji assess this week’s move in the Wall Street Journal, by claiming that “A rally that included shares of banks and energy companies helped push the S&P higher on Friday, giving the index weekly gain to end a volatile stretch.”

Stocks have struggled over the past week as investors have had to deal with the uncertainties going on in the world, the falling numbers connected with the pandemic, the seemingly stronger economy, the possibilities for inflation taking off, and other such things.

And, so investors have shown some lack of conviction and the markets have reacted with some volatility.

But, What About The Fed?

Underneath this all, the one main factor that appears to have not changed is the stance of the Federal Reserve System.

The Federal Reserve gives every indication that it plans to keep its foot on the gas pedal. Fed Chairman Jerome Powell has talked this up in the U.S. Congress this past week as he and Treasury Secretary Janet Yellen testified about the state of the economy and what they were trying to do about it.

The Federal Reserve’s vice chair, Richard H. Clarida, has also been out on the road this past week defending the Federal Reserve's position and also taking on several economists, like former Treasury Secretary Larry Summers and Olivier Blanchard, former chief economist of the International Monetary Fund, for their concern over the issue of

This article was written by

John M. Mason profile picture
16.11K Followers
John M. Mason writes on current monetary and financial events. He is the founder and CEO of New Finance, LLC. Dr. Mason has been President and CEO of two publicly traded financial institutions and the executive vice president and CFO of a third. He has also served as a special assistant to the secretary of the Department of Housing and Urban Development in Washington, D. C. and as a senior economist within the Federal Reserve System. He formerly was on the faculty of the Finance Department, Wharton School, the University of Pennsylvania and was a professor at Penn State University and taught in both the Management Division and the Engineering Division. Dr. Mason has served on the boards of venture capital funds and other private equity funds. He has worked with young entrepreneurs, especially within the urban environment, starting or running companies primarily connected with Information Technology.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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