The S&P 500 was on a 6-month 18% winning streak

Person looking at graphs on a laptop
September 2, 2021

The S&P 500 was on a 6-month 18% winning streak coming into August. We thought a continued increase in Covid cases could weigh on the market, but cases continued to increase during the month, and the S&P 500 continued to push into record territory. Strong earnings reports, good economic numbers, and the prospect of trillions more dollars coming from Washington appear to have investors looking beyond Covid to full economic recovery. The S&P 500 hit a new all-time high every week during the month, and valuations continued to expand. Oil prices had a volatile month, dropping 15% before closing with a loss of 6.5%, and gold ended the month little changed. At the end of the month, the S&P 500 had added another 2.9% and is now 20.4% higher for the year. August was the 7th consecutive month of gains for the S&P 500, something we haven’t seen since 2017.

The month began with news that manufacturing activity in the U.S. ticked lower in July, and growth in China was the slowest in 17 months. Reopen trades were stronger at week’s end, and the government reported a much better than expected 943,000 jobs were reclaimed in July, with unemployment dropping to a post-pandemic low of 5.4%. At the end of the week, the S&P 500 had managed to gain .9%. The highlight of the second full week was low volume, as many decided to get in last-minute vacations before school starts. Earnings continued to be strong, but consumer confidence dropped 13% as Covid cases continued to rise. Despite the mixed news backdrop, the S&P 500 was up another .7%. The third full week was the only week that ended with a loss. Reports of continued slowing in the Chinese economy combined with disappointing domestic retail sales push the market lower. In addition, the Federal Reserve was talking more about tapering their bond purchases by the end of the year. The negative news backdrop sent the S&P 500 to a loss for the week of .6%. The last full week of the month was the strongest, with the S&P 500 hitting a new all-time high 4 of 5 days. The Pfizer vaccine received full FDA approval, opening the door for more vaccine mandates. Covid positivity rates started to decline, which may suggest the current increase is peaking. The suicide bombing in Afghanistan was terrible, but Fed Chief Powell ended the week by saying rate hikes were not imminent. The S&P 500 ended the week with a 1.5% gain. Month-end saw another new all-time high as we closed out a strong month.

September is historically the worst month of the year for stocks and is the only month that has, on average, closed lower. The S&P 500 has hit a new all-time high every week since June 1st and is overdue for a pullback. September would be a logical place to see some profit-taking from recent gains, but we don’t expect a pullback to be more than 5% – 10%. The wild card continues to be Covid. As we said earlier, we are seeing a decline in positivity rates. A noticeable decline in new cases may negate the normal profit-taking we expect in September. Stock valuations continue to be extended as investor excitement about the reopening is trumping concerns about valuation. We believe this is a time to be cautious, but we will continue to use tradeable dips as an opportunity to buy.

If you know someone who would be interested in learning more about Greenberg Financial Group, or who is retired or thinking about retiring or would simply like us to review their current portfolio, please contact us at 520-544-4909, or contact us through 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.   

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