Stocks were higher today, as bellwether companies posted better-than-expected earnings results. 

Apple and Facebook, in particular, handily beat expectations for revenue and profits in the first quarter.

The communication services and financial sectors led on Thursday, while healthcare stocks trailed.

International equity markets were mixed on the balance between optimism around the global rebound and concerns over resurgent pandemic challenges. 

U.S. 10-year yields were higher, likely spurred by the recent proposals by President Joe Biden’s administration for additional fiscal-stimulus programs. 

Biden unveiled his $1.8 trillion American Families Plan, which includes spending programs related to child care, education and paid family leave. 

The plan also includes tax increases on high-income earners to offset the cost of the bill. 

This is a proposal only, and any final bill would need to be voted on and approved by both houses of Congress, and could be modified or changed significantly through that process before, and if, it does become law. 

In combination with the previously proposed infrastructure bill and stimulus checks, this is consistent with our view that fiscal stimulus will be a contributor to the economic rebound. 

Importantly for investors, while tax uncertainties are likely to instigate bouts of volatility, tax should not undermine the broader economic expansion or the bull market. 

Today’s release of the first-quarter gross domestic product report showed that the U.S. economy grew at an annualized rate of 6.4 percent in the first quarter, driven by a 10.1 percent surge in consumer spending that was helped by falling employment and two rounds of stimulus checks.

In addition to strong consumer spending, business and residential housing investment each rose by roughly 10 percent, confirming the momentum in corporate profits and the housing market.

Excluding the initial pandemic snap-back in the third quarter of last year, this was the best quarter for U.S. GDP growth since 2003. 

This now leaves total GDP just slightly below the pre-pandemic level, indicating that the lost output during the pandemic should be recovered in the second quarter.

We think economic growth will persist at an above-average rate through 2021, helped by healthy household spending and an accommodative policy backdrop, forming a solid foundation for equity market performance over time.

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