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U.S. Equities Market Attributes April 2021

S&P Latin America Equity Indices Quantitative Analysis Q1 2021

U.S. Equities Market Attributes March 2021

S&P Target Date Scorecard Year-End 2020

U.S. Equities Market Attributes February 2021

U.S. Equities Market Attributes April 2021

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Howard Silverblatt

Senior Index Analyst, Product Management

KEY HIGHLIGHTS

U.S. Equities Market Attributes April 2021

MARKET SNAPSHOT

The good times continued, and will until they don't. The new highs appeared faster than leaves falling in an early winter's frost, with profits blooming higher than dandelions after a spring rain. The gardening continued to be vigilantly overseen by the Fed & Treasury (the U.S. Federal Reserve, which still is not talking about talking about tapering, and the U.S. Treasury, which if you didn't like the last spending program, look at the two current proposals, or just wait a bit), as economic growth was measured against charts of actual stimulus checks and vaccine rates. Adding fertilizer to the garden were well-off consumers, who started what is expected to be a record-breaking spending spree, as they come out (safe or not) to resume their pre-pandemic lives. The impact of the wallet opening was seen in the first quarter earnings report, not by the 84% beat rate (249 of 297; 67% historically), but the size of the beat, as the first quarter was on track to set a new record (up 135% over the depressed Q1 2020 period) with the new high that wasn't expected until the second quarter. Those earnings records, with new ones expected for Q3 and Q4 2021 (Q2 is expected to be a tick down, and second only to Q1), fed the already optimistic market, as the S&P 500 set another 10 new closing highs for the month (of the 21 trading days; 25 new highs YTD). The bottom line was that the index returned 11.32% YTD (37.94% annualized), with some investors taking a little of f the top (and some reallocating to more liquid stocks), but few getting out of the market (less selling, and trading was down). With even more stimulus being discussed (via the American Infrastructure and Family Plans) and consumers charging on, upward pressure will likely continue. As for what could get in the way of the upward pressure, since even a pause in the Johnson & Johnson vaccine didn't impact the optimism, the current candidates are: COVID-21 (or the equivalent), a strong whiff of inflation (helped by overspending, cost push, and supply and labor shortages), higher debt cost (think national debt, not corporate), a resistance to higher price pass-throughs (lowering margins, which at 12.81% for Q1 could set an Operating record), a non-U.S. downturn (e.g., Europe and Asia, even as China is booming), the start of profit-taking with too many money managers jumping on the bandwagon to protect their gains, and a reliable old favorite— Washington.

The S&P 500 closed at 4,181.17, up 5.24% (5.34% with dividends) from March's 3,972.89 close. The Dow® broke through 34,000 for the first time, as it closed at 33,874.85, up 2.71% (2.78% with dividends).

The U.S. Senate Parliamentarian ruled that President Biden's USD 2.25 billion stimulus fiscal package is part of the of the previously passed budget resolution, which means a new budget does not need to be created, saving time and going directly to the reconciliation (political) process. In the background is an attempt by Democrats to change the filibuster rule, which would reduce the ability of Republicans to block legislation.

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S&P Latin America Equity Indices Quantitative Analysis Q1 2021

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Michael Orzano

Senior Director, Global Equity Indices

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Silvia Kitchener

Director, Global Equity Indices, Latin America

S&P Latin America Equity Indices Commentary: Q1 2021

The first quarter was a tough one for equity markets in the region, as a stronger U.S. dollar and the ongoing impact of the COVID-19 pandemic weighed on performance. Despite a 3.1% gain in March, the S&P Latin America BMI lost 5.8% in USD in Q1 2021, while the S&P 500® gained 6.2%. At the country level, the story was mixed. Mexico and Chile finished the quarter in positive territory, while Brazil, Argentina, and Colombia all declined. Peru was nearly flat.


The currency exchange rate plays an important role in the performance of regional indices. Given the strength of the U.S. dollar, returns measured in local currency were much better. In Q1, the S&P Brazil BMI lost 10.2% in USD but only 3.1% in BRL. Similarly, the S&P Colombia BMI lost 15.7% in USD but only 9.5% in COP. Peru had mixed results, with the S&P/BVL Peru General Index generating a nearly flat return in PEN (-0.7%), but a positive one in USD (2.6%). Chile’s and Mexico’s equity markets performed strongly in Q1, posting slightly higher gains in their respective local currencies than in USD terms. Argentina was the only market in the region for which returns in ARS and USD were negative. Therefore, the cumulative returns in local currency for Q1 of the S&P Latin America BMI (which excludes Argentina) was nearly flat, at -0.09%.


Let’s review some of the more interesting trends (in local currencies) that happened in each market. In Argentina, despite having a tough Q1, the flagship S&P MERVAL Index had strong gains for the one-, three-, and five-year periods with annualized returns of 96.8%, 15.5%, and 29.9%, respectively. It is worth mentioning that market volatility was the highest in this region.


Q1 2021 resulted in negative returns for most Brazilian equity indices, except for the S&P/B3 SmallCap Select Index (3.0%) and the S&P/B3 Low Volatility Index (1.0%). What was exceptional was the longer-term performance of the S&P/B3 High Beta Index, which gained 105.9%, 25.9%, and 39.6% for the one-, three-, and five-year periods, respectively. The S&P/B3 Ingenius Index, based on international technology-driven companies listed on NYSE or NASDAQ and on B3 as BDRs, continued to do well despite currency differences (11.0% BRL).



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U.S. Equities Market Attributes March 2021

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Howard Silverblatt

Senior Index Analyst, Product Management

KEY HIGHLIGHTS

U.S. Equities Market Attributes February 2021

MARKET SNAPSHOT

Finally, it was a month of trading without COVID dominating the market, although it did have impact. The market traded on fundamentals, as interpreted with a post-COVID view, which permitted five new closing highs and a flirt with 4K at the end of the month, as it set a new intraday high on the last trading day. Meanwhile, rumors, optimism, greed, and fear of losing out came back to the market—normality (at least as close to it as we can get). Housing news continued to be positive, but results were well short of estimates, as costs continued up and supply remained low, making it a seller’s market. Weekly Unemployment Claims returned closer to the pre-COVID level, breaking under 700,000 (in March 2020, it went from 282,000 to 3.3 million, reaching the weekly high of 6.9 million that month). The Fed maintained that it would continue to be accommodative—and no one doubted it, as it gave tentative approval to big banks for dividends and buyback increases post Q2 2021. Optimism ruled, and all you had to do to profit from it was to trade and not be the last one holding the issue (as streamed on Viacom and Discovery, and played on GameStop). Ah, market normality, heck of a way to make a living, but ain’t it great?

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S&P Target Date Scorecard Year-End 2020

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Hamish Preston

Director, U.S. Equity Indices

SUMMARY

  • The S&P Target Date® Scorecard provides performance comparisons and analytics covering the target date fund (TDF) universe.
  • The S&P Target Date Index Series offers representative benchmarks for TDFs. The series is investable, comprises consensus-derived asset allocation weights, and its composition is known in advance of evaluation periods.
  • After COVID-19 caused substantial recalibrations in Q1 2020, better-than-feared corporate earnings, bouts of optimism over the economic outlook, and vaccine rollout announcements contributed to an equity market recovery over the rest of 2020.
  • Large caps led the way in 2020 as the S&P 500® (up 18%) outperformed the S&P MidCap 400® (up 14%) and the S&P SmallCap 600® (up 11%). Strong returns from some of the largest companies in the market, coupled with smaller, more domestically focused companies' greater vulnerability to the Q1 2020 "COVID correction," were key drivers.
  • Far-dated S&P Target Date Indices outperformed their nearer-dated counterparts last year. Higher equity allocations meant the former participated in a greater proportion of 2020's equity market recovery.
Exhibit 1

  • However, on a risk-adjusted basis, the nearer-dated S&P Target Date Indices outperformed over all time horizons. The risk reduction from allocating more heavily to fixed income—a typically less volatile asset class compared with equities—more than compensated for the lower returns.
Exhibit 2
  • Larger TDFs continued to outperform their smaller counterparts on average. Asset-weighted returns were higher than equal-weighted returns in all but two categories. The 2010 vintage over one- and three-year horizons offered the exceptions.
  • S&P Dow Jones Indices also produces S&P Target Date Style Indices. The "TO" style indices aim to reduce the impact of market drawdowns around the expected retirement date, while the "THROUGH" style indices aim to mitigate longevity risk—the risk of outliving one's assets in retirement. Hence, THROUGH style indices have higher equity allocations than TO indices.
  • THROUGH style indices posted higher returns than their TO counterparts, while lower equity allocations helped to explain TO style indices' lower volatilities. Overall, near-dated TO style indices posted higher risk-adjusted returns than their THROUGH counterparts. The opposite was true for far-dated style indices.

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U.S. Equities Market Attributes February 2021

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Howard Silverblatt

Senior Index Analyst, Product Management

KEY HIGHLIGHTS

U.S. Equities Market Attributes February 2021

MARKET SNAPSHOT

"If you can't get on the train, step aside, there's another one right behind it." That automated New York City subway announcement moved to Washington this month, where a "go big" outlook on fiscal stimulus continued. The original USD 1.9 trillion stimulus bill (passed by the House and sent to the Senate) is now expected to total at least USD 1.6 trillion (after the opening Republican offer of USD 618 billion), with another one in the USD 1+ trillion area being worked on. Good thing interest rates are "still" low to cover the debt, wouldn't want to inflate the concern—but note the 10-year U.S. Treasury closed at 1.42%, as the 30-year closed at 2.15%. The impact of the prior stimulus bill was seen in the Weekly Unemployment Report (this month), as the total number of people collecting unemployment in all programs increased 2.6 million to 20.44 million (ending the month at 19.04 million), and the supplementary USD 300 weekly payment was started up again (the expired one had been USD 600). The effect of the stimulus bill was also shown by the 10% increase in Personal Income seen in January. For the market, the two-part harmony of the U.S. Fed and Treasury stimulus and support expanded, as some now saw it as three-part harmony, with the third part being individuals, which had been heard for a while, but they had now continued long enough to be considered part of the band by many. While not everyone agrees on the third part (ask GameStop traders), the two-part harmony seemed strong enough for the short-term, and if you don't fight the Fed you don't short Fed and friends (with the sidebar being that there is not much selling, outside of some IT profit taking, yielding little resistance to the upside). The Street's bottom line was the S&P 500 posting five new closing highs for the month (with six for The Dow®), as the S&P 500 closed above 3,900 for the first time, ending the month shy at 3,811.15 (3,800 was broken on Jan. 7, 2021; 3,700 on Dec. 8, 2020; 3,600 on Nov. 16, 2020). The S&P 500 posted a 2.61% February gain (it was up 5.94% on Feb. 12, 2021), making up for January's 1.11% decline. The index was up 1.47% YTD, up 13.12% from the U.S. Nov. 3, 2020, presidential election, and up 12.55% from the pre-COVID-19 Feb. 19, 2020, closing high (posting 30 new closing highs since then). A warning for the fun and potentially misleading stats for the Feb. 19, 2020, high (3,386.15) through the March 23, 2020, low (2,237.40), when the index declined 33.93%: the change from Feb. 19, 2020, was 12.55%, as the change from March 23, 2020, was 70.34% (personal belief: anyone using these numbers should explain the base, and not just quote a selected stat to support their point—keep your presentation kosher).


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