7 Months Out of 8 Higher

August 30, 2024

A late rally in July moved the S&P 500 back into positive territory for the 8th time in the last 9 months, but August opened on a Thursday with some profit taking.  The month began with some disappointing economic news that suddenly had market participants concerned about recession and those concerns were exacerbated by a Monday market meltdown in Japan that sent the S&P 500 down 7% in the first 3 trading days!  As the month moved on, better-than-expected earnings reports from major companies and economic numbers that were not pointing to recession helped calm nerves and by mid-month the S&P 500 was back to unchanged.  The rebound continued into the end of the month taking the S&P 500 higher for the 9th time in the last 10 months.  At month end the S&P 500 had gained 2.3% and is now 18.4% higher on the year.  We did see a rotation from tech to value as the rally expanded into other areas. The tech heavy NASDAQ was up .6% for the month while the more value oriented Equal Weighted S&P was up 2.5%.  Oil was fractionally lower in August while gold moved to a new all-time high and interest rates moved steadily lower.

The month began on a Thursday with disappointing economic numbers and that was exacerbated on Friday when we learned a lower than expected 114,000 new jobs were created in July. At the end of the first 2 days of trading the S&P 500 had shed 3.2%.  The first full week of the month opened with that news the Japanese market had plunged 12% sending the S&P 500 to its worst day in 2 years.  The selloff was related to something called a “yen carry trade” which is a sophisticated currency trade that went wrong.  However, the problem did not carry into a second day of trading, which helped the market rebound and on Thursday the S&P 500 had its best day in 2 years.  At the end of a volatile week the S&P 500 was down just 2 points!  The second full week was the best of the month with encouraging economic and corporate reports driving the S&P 500 higher every single day.  The week ended with the S&P 500 up 3.9%, the best week this year for the widely followed index.  The rally continued into the following week with the highlight being Fed Chief Powell’s encouraging remarks at the Jackson Hole Economic Summit.  He said he believes the time has come for a change in Fed policy which is an indication lower interest rates are around the corner. The final week’s focus was on Nvidia which has become one of the most important stocks.  The market is being driven by AI and Nvidia drives AI.  Wednesday evening the company issued another very strong quarterly report and while the stock opened fractionally lower on Thursday, the overall market enjoyed a “relief rally”.  At the end of the week the S&P 500 was fractionally lower.

September has historically been the worst month of the year for stocks.  It is the only month that has a negative return and it is the only month that has closed lower more often than higher.  We always take a cautious approach coming into September and we have done that again this year, reducing our exposure to the S&P 500 and adding insurance that we hopefully will not need.  There have been years when September has been a positive month, but with the market technically overvalued we are respecting history.  Nothing really changes simply because we flip the calendar to September, but acknowledging the month is typically a struggle can become self-fulfilling.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.