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Great quarter, guys

·Anchor
·3 min read
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This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Thursday, July 1, 2021

Value's year, but growth's quarter

The first half of the year and the second quarter of 2021 are officially in the books. 

And as Wall Street analysts are wont to say — "Great quarter, guys."

But it has indeed been a great quarter for those following financial markets. 

The first six months of the year witnessed the rise of the meme trade. Twice

Shares of GameStop (GME) and AMC (AMC) have gained more than 1,000% and 2,000% this year, respectively. 

An individual investor posting investment ideas on Reddit and YouTube testified before Congress

Elon Musk hosted SNL

The price of Bitcoin (BTC-USD) topped $60,000.

A digital currency started as a joke about an internet meme featuring a Shiba Inu (DOGE-USD) earned a market cap north of $80 billion. 

Warren Buffett inadvertently let slip that Greg Abel will likely be the next CEO of Berkshire Hathaway (BRK-A, BRK-B). 

And wood was one of the biggest characters in the market's story ("wood" meaning both lumber and Cathie).

Demand for just about everything, meanwhile, has exploded this year. Used cars, rental cars, chips, pilots, flight attendants, chlorine, shipping containers, and truck drivers are all in short supply and high demand. 

The economy grew at an annualized rate of 6.4% in the first quarter. Expectations are that growth accelerated to a 9% pace in the second. 

When 2021 began, COVID vaccines had only begun rolling out to select parts of the population. Now, more than 154 million Americans are fully vaccinated. 

Against this chaotic backdrop, financial markets at-large look quite placid. 

The S&P 500 closed Wednesday's session at a record high. The Dow and Nasdaq closed just below records. Each of these indexes recorded more than 18 record closes during the first half of the year.

But leadership this year has come from pockets of the market that were also-rans during the last decade's triumphant rise of big tech. The financial sector (XLF), regional banks (KRE), value stocks (VLUE), and the energy sector (XLE) are all up more than 20% this year.

It's also been a huge year for retail of all varieties. Retail stocks (XRT) — meaning shares of companies that are retailers — have risen some 50% this year. And retail investors have continued to participate in this market, and their favored trades have been outperformers

Over the last month, we've seen a bit of a change in the market's character as the tech sector (XLK) and software stocks (IGV) have outperformed the broader market. Treasury yields, which rose precipitously in the winter's early months, have come in recently — even while Federal Reserve officials suggest a change in the central bank's policy stance could be revealed in short order and inflation readings hit multi-decade highs.

If the second half of this year is a bit less memorable than the first, we doubt too many folks would be disappointed. Then again, almost no one thought 2021 would top 2020's market theatrics. And look where that got us. 

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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