Market Highlights 2Q 2021

The market moved higher in the second quarter of 2021 as we began to see an increased rollout of COVID vaccination with the US achieving vaccination rates of 48% of the population. Nevertheless, the Delta variant has continued to spread aggressively, putting re-opening in many economies at risk and continuing the suffering in India and Brazil. Antitrust reform legislation has gained a renewed focus in Congress as six antitrust bills passed the House Judiciary Committee. The bills still need to move through the House and, eventually, to the Senate, but are a starting point, and companies are paying attention. Despite the bills, we saw Amazon announce the acquisition of Hollywood studio MGM for $8.5B. On the other side of the World, China ordered Alibaba to pay a record fine of $2.8B after antitrust regulators concluded that it has been acting as a monopoly. Ransomware attacks increased around the world with the Colonial Pipeline hack taking down gas supplies to the East Coast and the JBS Foods hack impacting meat supplies around the world. Inflation fears grew as the impact of the $1.9T COVID relief bill continued to flow through the economy. The Federal Reserve held interest rates steady at near-zero but the new dot-plot shows expectations of two rate increases by the end of 2023, based on median estimates. The 10-year peaked at the end of March at 1.7% and subsequently fell back to 1.5%. Bitcoin peaked later hitting a high in early April of $63k then falling back down to end the quarter at $35k.

The Nasdaq Composite returned 9.68%, ahead of the S&P500’s return of 8.55% and the Dow Jones Industrial Average’s gain of 5.08%. Ten out of the eleven sectors posted positive returns during the period with Real Estate, Information Technology, and Energy posting the largest increases with returns of 13.09%, 11.56% and 11.29%, respectively. Large-cap stocks outperformed mid-cap stocks, which beat small-cap names. Specifically, the Russell 1000 Index rose 8.54% compared to the Russell Mid-Cap Index, which returned 7.50%, and the Russell 2000 Index, which gained 4.29% for the quarter. Growth recaptured its lead over value in the quarter, as the Russell 1000 Growth Index gained 11.93% compared to the 5.21% return of the Russell 1000 Value Index over the same period. Bond returns were positive over the period with the long-dated US Treasuries returning 6.80%, beating US corporates with the Barclays Aggregate returning 1.83%. The US Dollar Index declined -0.85% for the quarter while gold gained 3.15% and oil gained 24.19%.

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Related posts:

Bill Miller's 2Q21 Market Letter

Infographic: 2Q21 Market Data

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The views expressed in this commentary reflect those of Miller Value Partners analyst(s) as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.

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