Market Briefing

March 2021

Stock prices were moderately higher, on average, in February. Small capitalization stocks continued their recent outperformance over mid and large cap stocks. Economic news for the month was mostly positive with expansion indicated by manufacturing and non-manufacturing measures. Factory orders and durable goods orders were higher. Retail sales for January were particularly robust. New and existing home sales reports both showed increases. Earnings reporting season was in full swing and a high proportion of companies reported results that exceeded analyst estimates. Despite a moderate CPI report for January, rising energy and other commodity prices along with rising treasury yields and the likely passage of an additional fiscal stimulus package had investors becoming concerned that inflation is on the horizon. This had the effect to drive stock prices down at the end of the month. Investors favored smaller capitalization, value stocks during the month with price/book value, price/cash flow, price/sales and normal p/e ratio among the top performing stock selection factors. High quality, large cap growth stocks were out of favor in February. Estimated growth rate, price momentum and earnings and sales growth rates were among the weakest performing measures. Nearly all the industry groups we cover had positive average price gains for the month. Groups that are benefiting to reopening of the economy and the oil sector were top performers for the month. Food and beverage and household products were among the weaker industry groups in February.

Value of the Market

Source: Ford Equity Research