A Late Rally Turns Things Green

July 31, 2024

July was a busy month for news.  Not only did we begin to see the first earnings reports from the second quarter, but we saw the assassination attempt on President Trump and learned President Biden will not seek a second term and the Federal Reserve Open Market committee left interest rates unchanged but did note progress in taming inflation.  Despite all this potentially market moving news, the major indices all moved to new all-time highs during the month.  The month was divided, with stocks rallying to new all-time highs during the first half of the month before giving up most of that gain in the last half of the month.  The first half showed continued excitement about artificial intelligence while the last half was the realization the economy is slowing.  There was also a theme that began to develop near month’s end that perhaps the money being spent on artificial intelligence is not paying dividends.  At the end of the month the S&P 500 was up 1.1% and is now 15.8% higher for the year.  The big winners in July were small cap stocks who will benefit from lower interest rates and that index rallied 10.3%!  Oil was down 4% in July, but gold gained 4%.

The month began with a holiday shortened week that saw technology stocks help the S&P 500 rally every trading day.  The widely followed index gained 2% for the week, while the more representative equal weighted S&P index was down .4%.  During the second full week we began to see the first quarterly earnings reports and those reports helped the S&P 500 move above 5600 for the first time in history.  Late in the week we saw what was going to become a theme for the remainder of the month, traders rotating out of this year’s big gainers and moving into areas that had not yet participated in the rally.  Despite this rotation, the S&P 500 was able to hold onto a .9% gain for the week.  The following weekend was the attempted assassination of President Trump and that lead to a Monday rally on the belief this event likely enhanced President Trump’s chances of winning.  On Tuesday, the Dow Jones Industrial average rallied to its best day in over a year.  However, on Wednesday both President Biden and President Trump made negative comments about semiconductors sending the tech heavy NASDAQ to its worst day since 2022. On Friday, an overnight flawed software upgrade attempt by CrowdStrike shut down much of the world and sent the S&P 500 to its worst week in 3 months.  The last full week saw President Biden announce his departure from the race but the market moving story of the week were earnings reports from Google and Tesla that were disappointing and the tech heavy NASDAQ, that had its worst day in a year the week before, plunged to a new “worst day” on Wednesday.  Friday, we learned the Federal Reserve’s favorite inflation indicator was in line with expectations and that helped the S&P 500 rebound to end the week with a loss of just .8%.  We ended the month with a strong rally in semiconductor names after AMD reported results above expectations.

History has not been a good guide this year.  July is historically the best month for stocks with April in second place and both months were disappointing.  With that said, August has traditionally been a very average month for stocks showing a gain of .6% and closing higher roughly 60% of the time.  In addition to dealing with corporate earnings reports, geopolitical events, and the Federal Reserve, we will see the added influence of the Presidential election cycle, all of which will make August an interesting month for stocks.  There were some concerns late in July that the massive spending on artificial intelligence may not be paying dividends and might slow.  If that were to happen, we would expect to see weakness in tech stocks and a continued rotation into value and small cap.  We have been sitting on more cash than normal and will continue to deploy some of those assets on weakness.

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.