Optimism abounds

Equity rally stalls but catches breadth on positive earnings


Authored by RSM US LLP

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Despite entering 2021 with elevated long-term valuations, near term financial market conditions remained favorable for risk assets. Georgia’s special election results cemented Democrat control of the Senate and cleared a path for President Biden’s $1.9 trillion stimulus plan. In the wake of COVID-19, coordinated fiscal and monetary policy will likely support economic growth and result in strong corporate earnings growth in 2021. That said, asset class returns were mixed in January.

Since November, this environment supported typical patterns seen following bear markets, with the advance led by more economically sensitive equity market segments. While we are generally constructive on markets in the near-term, we are keenly focused on the rebound in business activity following more progress with the vaccine. Markets are forward-looking and have benefitted from the reopening optimism, but it remains to be seen how these developments will impact economic data, which is backward-looking. Conditions appear to be in place for growth-sensitive assets to continue their ascent that began a little less than a year ago.

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Information in this document was prepared by DiMeo Schneider & Associates, L.L.C. and although information in this document has been obtained from sources believed to be reliable, RSM US Wealth Management LLC, DiMeo Schneider & Associates, L.L.C. and their respective affiliates do not guarantee its accuracy, completeness or reliability and are not responsible or liable for any direct, indirect or consequential losses from its use. Any such information may be incomplete or condensed and is subject to change without notice. The Frontier EngineerTM is a registered trademark of DiMeo Schneider & Associates, L.L.C.