U.S. equities finished higher Monday with energy, materials, financials and industrials sectors leading, while small-cap equities also outperformed, indicating a positive cyclical tone to today’s gains.

International stocks were broadly up as well, though trading was lighter as the mainland China, Japan and U.K. markets were closed for holidays. 

Interest rates were down modestly, with the 10-year benchmark Treasury rate trending closer to the 1.6 percent level after largely treading water for the past several days. 

Overall, it was a very quiet start to the week, with no significant headlines or data spurring a material shift in the investment narrative. 

The stock market remains near all-time highs, with strong economic and corporate earnings data last week supporting an optimistic outlook. 

Fiscal stimulus remains in the spotlight, with reports out of Washington suggesting that a bipartisan approach toward an infrastructure bill is not completely off the table. 

While President Joe Biden proposed a $2.3 trillion bill, counterproposals for a smaller, more targeted plan may be unveiled in an effort to secure supports on both sides of the aisle. 

We suspect proposed tax hikes will remain a sticking point. 

Last week’s release of the first-quarter gross domestic product report showed that stimulus checks provided a strong boost to the economy to start the year. 

Fiscal policies will remain a tailwind for growth this year but the labor market and household spending, not Washington legislation, will be the most powerful driver of economic growth. 

Manufacturing surveys released today showed that supply bottlenecks and rising input costs became more challenging in April, reflecting the current stage in the rebound in which demand is outpacing supply. 

Nevertheless, the economic headliner for this week will come on Friday when the April jobs report is released. 

Job growth accelerated in March, and expectations are for further improvement in April, with payroll additions potentially coming in around the one million mark. 

As vaccinations rise and the economy more fully reopens, we think the services sector, including the dining, entertainment and travel industries, will power healthy job gains. 

The U.S. economy will likely return to pre-pandemic GDP levels in the second quarter, but we’re just entering the mid-cycle phase of the economic expansion, with sustained growth led by rising consumer spending, a strong housing market, and increased business investment. 

The investment conversation will include concerns over inflation and reduced monetary-policy stimulus this year, but the growing economy should continue to set a sturdy foundation for performance over time. 

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