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Tuesday 31 August 2021
The worst month of the year… was a great month.
As August began, investors were warned that history was not favorable for the stock market during the last full month of the summer.
This is an annual tradition in market commentary.
the past Periods of 10 and 20 years, the average return of the S&P 500 Index (^GSPC) in August was negative – a distinction matched only by September’s equally poor performance. And in the years following the presidential election, only February has been less friendly to investors.
And with concerns such as the phasing out of the Federal Reserve’s asset purchase program, the spread of the Delta variant and concerns about unemployment benefits expiring, August 2021 seemed full of potential pitfalls for the markets.
Almost none of them came true.
With the S&P 500 closing at a record high on Monday, the benchmark index has hit 13 record highs this month. Any progress on Tuesday marks another record for the index. As of Monday’s close, the S&P 500 is up more than 3% so far this month, and on track for its best monthly gain since April.
In lieu of the summer slump, Wall Street strategists began raising their long-term forecasts for the stock market this month. Earnings results, meanwhile, continued to impress. And with so many eyes on the Fed’s next move, it seems that the dreaded redux of 2013’s expiring tantrum has begun to fade as a market risk.
But if this August disappointed against one version of market history, it shone through a different light.
Through July, the S&P 500 had delivered a positive monthly performance for six consecutive months. And as LPL’s chief market strategist Ryan Detrick noted on August 2, the seventh month S&P 500 ended two-thirds the time we’d seen this setup before. And the following year, stocks rose an average of 12% in 18 of the 21 periods following six consecutive monthly advances for the S&P 500.
In addition, we are in the second year of the bull market that started in April 2020. Since 1957, the second year of bull markets, the S&P 500 has risen about 13.3% on average, according to data from Keith Lerner of Truist. As of Monday’s close, the S&P 500 is up 20% so far in 2021.
And with the benchmark index now at work for seven consecutive winning months into year two of a bull market – amid economic expansion – skeptics will have to do better than “too far, too fast” to outline what the momentum of this one is. market will stop.
What to watch today?
9:00 a.m. ET: FHFA House Price Index, month-on-month, June (1.9% expected, 1.7% in May)
9:00 a.m. ET: S&P CoreLogic Case-Shiller 20-City Index, month-on-month, June (1.80% expected, 1.81% in May)
9:00 a.m. ET: S&P CoreLogic Case-Shiller 20-City Index, year-on-year, June (18.60% expected, 16.99% in May)
9:45 a.m. ET: MNI Chicago PMI, August (68.0 expected, 73.4 in July)
10:00 a.m. ET: Consumer Confidence Conference Council, August (123.0 expected, 129.1 in July)
President Biden will address the nation at 1:30 p.m. ET on the end of the war in Afghanistan. Biden says he will look back on the evacuation of more than 120,000 people and his “decision not to expand our presence.”
Social Security and Medicare Trustees is scheduled to release its annual report. The report – the first to take into account the COVID-19 pandemic – should provide a picture of how quickly the programs will become insolvent.
Zoom stocks plunge in after-hours trading despite beating earnings expectations [Yahoo Finance]
Robinhood falls after SEC hints at payment for order flow ban [Bloomberg]
EU removes US from list of COVID-safe countries to travel [Reuters]
Cathie Wood has been buying Komatsu almost every day since mid-August [Bloomberg]
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Sam’s Club CEO on shopping habits, vaccines and disruptive pricing