Financial markets followed through on recent momentum to generate strong returns for investors in the second quarter of 2021. Equity markets in the U.S. led the way once again with the S&P 500 index up 8.2% in the quarter (excluding dividends), while foreign stocks and the stocks of smaller U.S. companies were up a little over 4%. For the year, the S&P 500 is now up 14.4% and the S&P 600 is up nearly 23%. To provide longer-term context, U.S. stocks (S&P 500 index) are now up over 70% since the end of 2018 and have nearly doubled from the lows of the pandemic last March. U.S. bonds reversed some of the weakness experienced during the first quarter (the worst quarter for bonds in 40 years), as the Bloomberg Barclays Aggregate Bond Index gained 1.8% to bring the year-to-date return to -1.6%. The bond market was supported by a decline in the 10-year Treasury yield to 1.44% from a high of 1.77% at one point during the first quarter.
