Markets, Economy

Weekly Kickstart (09/04/2018-09/07/2018)

9/4/18 8:00 AM

iStock-626627280.jpgStocks continued higher last week, as the S&P 500 rose by 0.93 percent to 2,901.52. That left the benchmark index up 8.52 percent year-to-date, and just 0.43 percent below the record close (hit on Wednesday). As for the month of August, the S&P 500 experienced a few wild swings but still managed to post a 3.03 percent gain. That was the 5th monthly increase in a row and almost enough to match July’s 3.60 percent rise. With such strong performance, bullish sentiment also turned higher in August, according to new AAII data. Specifically, 43.5 percent of surveyed individual investors said that they expect stock prices will rise over the next six months, the best reading since mid-June. At the same time bearish sentiment plunged to just 24.4 percent, well below the long-term average.

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Looking ahead, September historically has been the worst month for equities, and there is still a lot of potential headline risk for the markets to deal with in the near-term, e.g. geopolitical uncertainty, monetary policy, and the rapidly approaching midterm elections. None of this necessarily means that the bull market is coming to an end but rather that retail investors should not be too surprised if volatility picks up as larger (institutional) market participants sitting on big quarterly gains look for excuses to take profits (sell). Moreover, retail investors should continue to focus less on the day-to-day fluctuations in the market and more on the long-term goal of amassing a large retirement nest egg. Assistance is available through the consistent use of tax-advantaged savings vehicles, dollar-cost averaging, and regularly consulting with a professional financial advisor. As always, we are here to help with any questions you may have.

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To recap a few of the things we learned about the economy last week, the positives included that home prices rose at a slower rate, Americans’ personal income increased for the 29th month in a row, consumer confidence rebounded, first-time claims for unemployment benefits slid to a nearly half-century low, and U.S. gross domestic product (GDP) growth in the second quarter of 2018 was revised higher. As for the negatives, mortgage applications declined, pending home sales unexpectedly fell, the nation’s trade deficit widened, consumer spending growth cooled, household inflation pressures firmed, and gauges of regional business activity continued to send mixed signals. This holiday-shortened week the pace of economic data picks up slightly, with a few important reports on manufacturing and employment scheduled to be released, including the potentially market-moving August job report from the Bureau of Labor Statistics due out on Friday. There are also numerous speeches by members of the Federal Reserve scheduled throughout the week that investors may be paying close attention to.

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**A more detailed snapshot of the U.S. economy can be found here.**

What To Watch:

Monday

  • US Holiday: Labor Day
  • Markets Closed

Tuesday

Wednesday

Thursday

Friday

  


 

Sources: Econoday, AAII, FRBSL

Post author: Charles Couch

Disclosures