Wall Street's subdued finish fails to detract from strong August

The market took a breather today after Monday’s terrific excitement over Jackson Hole, dipping a hair but nowhere near enough to even dent the S&P’s 3% gain in August capping seven straight months of gains. But the skeptics were back today with a new Reuters poll showing that the S&P is unlikely to rise much further in 2021, quite a change from Monday’s forecast which ended the year at 11 percent. Tech stocks are expected to continue to do great as long as the Fed’s commitment to low interest rates holds true. For once, and now that Jackson Hole is behind us, volume was above average at 9.8 billion. 

S&P, Nasdaq post record closes on dovish Fed taper-talk

Powell said it loud and clear today – no rush to raise interest rates. The economy will continue to enjoy an extraordinary amount of support. This completely delighted the markets with everyone rushing back to the tech stocks that will benefit from lower rates and shooting the S&P and Nasdaq to new records. It was the 4^th record in 5 sessions for the S&P and the 5^th in 6 for the Nasdaq. The S&P has risen 3% in August and is expected to go to 11% by year end. With the risk-on mood sending everyone to tech, the Dow took a mild 55 point hit. One more market day in August to see if the S&P stays at 3 percent. Volume was just a tad below average at 8.7 billion. 

QUALITY INVESTING

And now for another video night as I present this week's episode of WealthTrack featuring an interview with Lawrence Cunningham, law professor at George Washington Unversity and one of the world's foremost authorities on Warren Buffett and Berkshire Hathaway, having even coauthored a book with Buffett, among other classic best sellers on value investing.  Enjoy.  It looks like this hot summer heat may finally be over and we're in for a beautiful week.  

Retire on a Home Run, First Cut REIT Stocks, Level3 Update

For your consideration this weekend I submit below the next AAII webinar, this one entitled "Retire On a Home Run."  It is this coming Wednesday and registration is required so use the link below to sign up if interested. Tomorrow's another hot one so try to stay cool.  

S&P 500, Nasdaq nab all-time closing highs as Powell soothes taper fears

I was tempted to conclude yesterday’s remarks with the comment: “In terms of Jackson Hole, if the smart money turns out to be right and the hedge betters wrong, there’s going to be a big rally on Friday.”  And that’s exactly what happened. Without giving much detail on a timetable, Powell did exactly what the market wanted and maintained a dovish tone, certainly much moreso than other Fed officials. And with reports released Friday showing pullbacks in both consumer spending and sentiment due to Delta, the Fed is once again maintaining the status quo.  There is also the added assurance that recent price spikes will not translate into long term inflation.  Volume remains a tad below average at just under 8.7 billion. 

Wall Street closes lower, ending rally on Afghanistan, Fed concerns

Some experts believe the big sell off today was triggered by the chaos in Afghanistan but most believe the inciting incident was a hawkish comment from the Dallas Fed president who commented that tapering should begin in October. So a full week of confidence that the Fed will continue dovish policies went out the window, ironically on the word of a Fed official who has no vote on the matter.  But it created confusion and the market hates confusion. The good news is that a new GDP report shows that in Q2 the economy has now fully recovered from the most abrupt downturn in U.S. history. But when Jackson Hole convenes on Friday, everyone will be watching every word.  Volume remains a little below average at just under 8.3 billion. 

S&P 500, Nasdaq notch all-time closing highs ahead of Jackson Hole

As the day went, all three indexes went up in the morning, the Dow an impressive 140 points, the Nasdaq and S&P considerably less but still enough to make new records. Again, it was all optimism for Friday’s meeting in Jackson Hole where the expectation is that the Fed will vote to keep things status quo, not tighten policy. But then, almost as if to hedge bets that there might be a surprise on Friday, everything dropped, for the Dow to close up just 40 and the other two to close even more modestly but still enough for the S&P to notch its 51^st record for the year.  

Wall St advances, pushing S&P 500 to 50th record high close this year

Yesterday’s exuberance over higher vaccination rates spurring on the recovery now that full FDA approval is in hand spilled over into today with all the indexes ticking up and especially the S&P notching its 50^th record for the year, only the third time in history (’64 and ’95) the index accomplished that by August. The fact that the economically sensitive cyclicals outperformed the rest is further evidence of a broadened faith in the recovery. The consensus remains that economic data is strong but not so strong as to make the Fed dial back, which is what the markets want right now. Truth will be told at Jackson Hole in a couple days but the fact that the Fed symposium will be virtual is yet another message to the market that the economy continues to need support so policy will not be tightened. Volume was very close to average at just under 9 billion. 

Wall St gains, Nasdaq notches record closing high on full vaccine approval

Today’s full FDA approval of the vaccine boosted market sentiment as an indicator that the vaccination rate could now reach 75% boosting the recovery even more. The Dow leaped 215, the Nasdaq hit a new record up 227 and the S&P closed just shy of a new record itself. The best news is that new economic data today suggested the recovery was on the right path but not doing so well that the Fed would reverse course. And as today’s expert put it, “The fundamentals are in place. There’s worries out there, but it’s hard to keep this market down.”  Volume remains a little below average at 8.6 billion and this probably won’t change until after Jackson Hole.  

3 Stock Market Investing Strategies For Beginners (48 min)

As promised yesterday, for those of you who enjoyed the condensed 16 minute version of the Heitkoetter video, tonight you get the link to the full 48 minute version that he posted last week.  It's been quite a while now since Barry Ritholtz has stopped running his weekly summary of market events on the weekend.  I've been looking for a replacement and thought I found one this weekend but it turned out only to be an advertisement for what we all know are countless informational offerings on investments, most of which are useless. 

Stock Market Investing Strategies For Beginners (16 min) - Trading Basics - YouTube

Marcus Heitkoetter has a website I follow from time to time and today he posted a video I felt might prove useful to anyone looking for simplicity in their investment strategies. This is a 16 minute condensed version of a nearly one hour video he posted a week ago. If you like this one, I'll post the complete production tomorrow.  

Wall Street rallies as Fed jitters wane, but ends down for the week

All that cash on the sidelines went to work today with all the indexes sharply higher after a weeklong plummet.  Today’s expert summed it all up, “Towards the beginning of the week you saw traders balancing their books ahead of the Fed statement. Once it came out, you saw ‘sell the rumor, buy the news.’”  The markets today finally acknowledged that all the earlier selling was based on conjecture which may be baseless. So the bargain hunters went to work and they’ll see what the Fed actually has to say at Jackson Hole next week.  Almost all S&P companies have reported Q2 now with 87% beating estimates. Volume was once again a little below average at 8.7 billion. 

S&P 500 ends with slim gain as tech strength offsets cyclical woes

With concerns over tapering growing, investors fled cyclicals and went back to the growth offered by tech when unemployment claims fell to a 17 month low, giving further fuel to the argument that the jobs market is strong enough to start the tapering. Earlier in the session the Dow was down almost 300 points as the reaction to yesterday’s Fed minutes continued to panic sellers, though optimism started taking over in the latter part of the session and the Dow closed down just 66 with the tech-heavy Nasdaq and S&P showing modest gains. There is so much cash on the sidelines and the trend during the past year has been to inject the cash on days of weakness, otherwise called bargain hunting. Inflation is the main concern and everyone awaits Jackson Hole to see what the Fed’s plan is.  And for the second time this week, volume is above average at 10.3 billion. 

S&P 500 ends down over 1% after Fed minutes

The whole day was going almost even –steven and then dropped precipitously right after 2 pm which had to be when the Fed published the minutes of the July meeting. The bottom line: “The Fed minutes did nothing to dispel the thought that tapering will begin soon.”  It was the vagueness of the statement that sent everyone to the exits, the Dow dropping 382 points, the Nasdaq 130.  As always, the one thing Wall Street hates the most is uncertainty, though in this case it wasn’t entirely warranted since the real story on tapering is coming out at Jackson Hole next week so last month’s minutes were likely deliberately vague. But earnings and economic data continue to point to a very broad optimistic outlook so the dip probably won’t last long. After a brief and ever so slight surge in volume yesterday, it was back to below average today at 8.8 billion. C’mon Jackson Hole! 

Wall Street slumps after weak retail sales, Home Depot results

With market valuations being so high, there have to be days when as today’s expert put it, “there is just going to be more vulnerability to any kind of bad news” and today’s bad news of retail sales coming in lower than expected triggered a mild panic since consumer spending has been the life preserver that’s been keeping the economy going during this pandemic. It didn’t matter that the drop in sales was directly attributed to the same old supply chain problems that has made it difficult to buy things; the Dow still closed nearly 300 down though this was a lot better than the 500 down it had been throughout much of the day. But the consensus remains that the fundamentals are solid. 

S&P 500, Dow hit record highs as defensive shares shine

After spending most of the day deeply in the red, all three indexes recovered by close as defensive buying shot both the Dow and S&P to still new records, making this the fifth straight day of record advances. The S&P has now doubled since March 2020 and the market environment remains supportive of risk so the upward pull on stocks is expected to continue. But much depends on the future of Fed stimulus policy so eyes will be on meeting minutes to be released Wednesday. Saving the day is the massive amount of cash that’s out there enabling investors to buy on every little dip and keep the market buoyant. Volume remains below average at 8.5 billion.  

Bartlett: How Nixon Changed U.S. Economic Policy Forever

I had planned to provide an AAII article on dividend investing until I saw this article on the Big Picture website this morning and thought it would make an ideal companion piece to yesterday's post on the gold standard. It was 50 years ago today, August 15th 1971, that Nixon imposed wage and price controls and effectively abolished the fixed exchange rate system that took us off the gold standard which had been in effect since 1945.  

50 Years Off the Gold Standard

I was in college when Nixon took us off the long admired gold standard and it has been a subject of controversy ever since. So many traditional conservatives argued it would be a disaster for the dollar to no longer be backed by gold. But much to my surprise, my econ professors in both college and grad school argued that it was the best thing that Nixon or any president had ever done, namely because the gold standard was artificial and by going off it, the dollar was now based on something real -- wages and prices -- and it was an argument that stuck and has been proven to be correct.  

Dow, S&P close at records as Disney offsets drop in sentiment

‘Twas a pretty flat day overall but still, with all three major indexes closing ever so slightly in the black, it made for another record setting day for the S&P and Dow. The bad news today was a dent in consumer optimism as reported by the University of Michigan showing it at its lowest level in a decade and attributed to consumer COVID fatigue brought on by the Delta variant. But the objective data shows the consumer is in great shape and, as today’s expert says, “healthy enough to spend and kind of keep the economy afloat.” But overall, good news abounds. 

S&P 500, Dow set fresh records as recovery marches forward

Though the Dow spent the morning almost 150 points in the red but did recover to end the session ever so slightly in the black, the Nasdaq and S&P fared considerably better as investors flocked back to tech to pick up bargains after being down for a week. But with the Dow and S&P already at records, the slight increases put them at still new records and, as today’s expert put it, “for good reasons.”  “The fundamental backdrop is supportive of higher equity prices” with Q2 going great, interest rates low and inflation under control. 

Slowing inflation growth lifts Dow, S&P to records

Still another day where there are new records for the Dow and S&P, spurred on by reports that inflation is getting under control. This time the Fed is sending signals that stimulus tapering may be in the works soon and that an announcement could come as early as next month. Cyclical stocks were again the best performing while the $1T infrastructure package is still being hailed, the 3.5T supplemental package decidedly less so. At 8.6 billion, volume remains below average.  

Dow, S&P 500 hit records as infrastructure bill passes Senate

With the unprecedented and decades overdue infrastructure package passing the Senate, promising lots of added support for the recovery, the Dow and S&P were once again pushed into records with the markets approving of this bill and very much betting against the much more ambitious bill not making it through the House.  Once again the cyclical stocks were the top performers and growth took a holiday. Inflation will remain a key issue and the reports this week will be watched carefully.  Volume again came in below average at just under 9 billion. 

S&P dips, just off record as energy shares fall

There was a modest pullback on the Dow and S&P today as the market did its usual tug of war between inflation fears and recovery optimism, muddled of course by the Delta surge. But today at least it appeared that bond yields might be normalizing and that was cause for celebration by the rate-sensitive cyclicals.  But there will be more watching of inflation readings this week and confusion was further stoked by conflicting Fed statements. Atlanta prez Ralph Bostic said we’re still a long way from raising rates while Richmond prez Tom Barkin said we were ready now for an increase.  This has further highlighted the importance of the Jackson Hole meeting later this month. Expected Q2 profit growth today stands at 91% with 443 companies having reported and 87.4% beating estimates. Volume was below average at 8.5 billion. 

Upgraded Stocks to Buy in August

To start everyone's week off on what is supposed to be a very hot week, I thought I'd offer the latest list of hot stocks for August as given this week by U.S. News Invested.  There are only a couple names here that I recognize ... and that may be a good thing.  Hope everyone had a great weekend.  And try to stay cool until Friday when this heat wave will supposedly break.  

Two Very Different Views of the Bond Market

With the volatility in the stock market in recent years, I know more than a few (overly?) caution folk who still prefer the safety and guarantee of bonds over the much higher but also much more rollercoaster yield of stocks.  We're all aware that the stock market has been going crazy for several years since the Fed has kept interest rates near zero so investors must be in stocks if they plan to make any kind of decent returns.  But the bond market may be changing now and becoming more competitive with stocks. 

S&P 500, Dow close at record highs as solid jobs data boosts cyclicals

The payrolls report came in quite a bit better than expected with an increase of some 73,000 jobs above the forecast. This lead to more record highs on both the S&P and Dow and drove the unemployment rate to a 16-month low. Once again there is a renewed confidence in the recovery evidenced by yet another rotation out of growth and into cyclical and value stocks. The Q2 profits forecast now stands at an unprecedented 92.9% with 427 S&P companies reporting and 87.6% beating forecasts, the highest on record.  Robinhood continues its rollercoaster ride, today with a boost of 7.9%, adding billions to its value this week.  But sentiment continues to be haunted by fears of inflation and a sudden tapering in Fed stimulus, which  is why the focus now will be on the Jackson Hole conference later this month when the Fed is expected to decide future stimulus strategy.  Volume remains below average at just over 8.6 billion. 

Nasdaq, S&P 500, set records as jobless claims decline

It was risk-on today as new claims for unemployment continue to decline and layoffs dropped to the lowest level in 21 years creating a new pre-pandemic low. The Dow surged 271 points and the Nasdaq and S&P to new records while investors anxiously await Friday’s jobs report. If it’s another disappointment like Wednesday’s employment report it could trigger new doubts about the recovery. Or it could trigger more optimism that the Fed will hold off longer on rate hikes and continue stimulus. Robinhood, after four straight sessions of gains, lost nearly 28%, clearly indicating this is a volatile risky stock and that more panic selling may ensue. Volume was below average at just over 8.8 billion. 

Wall Street closes mixed, S&P 500 ends off record high

Yesterday it was risk-on, today is risk-off again with the Dow plunging 323 points but the Nasdaq picking up 19 and the S&P falling from a record high. It’s the same story – global uncertainty regarding economic disruption and though the Fed issued another statement about raising interest rates sooner rather than later, the Nasdaq, which is interest rate sensitive and should have fallen, instead rose. It just goes to show that nothing is predictable in this business.  The employment report was a disappointment meaning Thursday’s unemployment benefits report and Friday’s payrolls report become all the more important. Robinhood, after a less than stellar start last week, jumped 50% today, its fourth day of gains. Volume was right in line with recent averages at just under 9.8 billion. 

S&P 500 closes at record high as Apple, healthcare stocks help shrug off Delta worries

The last two sessions have been risk-off, today was risk-on again as investors picked up bargains and bought into healthcare over the Delta surge. Factory orders were up 1.5% vs a forecast of 1% and overall sentiment is once again optimistic as consumption is very strong leading to the conclusion that another broad lockdown will not happen.  The Dow surged 278 points, the Nasdaq 80, S&P Q2 earnings are now expected to climb 90% and, as today’s expert put it, “people are underestimating the strength of recovery.” The market anxiously awaits both the services sector report and jobs report due later this week.  Volume was a little below average at just under 9.3 billion. 

S&P 500 edges down on virus woes, slowing economy

There was yet another modest pullback today with the raging Delta variant worrying the markets about the recovery and not helped at all by some rather pessimistic utterings from Fed Governor Christopher Waller who opined that the stimulus may be scaled back as early as next month, quite the change from earlier announcements that nothing would change before 2023.  Manufacturing reports show that it is beginning to slow as the obstructions in the supply chain begin to get repaired. The main issue today were fears that growth may slow and the winning sectors today were utilities and real estate, the safe bets during struggling times.  With manufacturing slowing down, all eyes will be on the services report due Wednesday and, as always, the jobs report due Friday. As uncertainty rises and investors await more data, volume was below average at 8.8 billion. 

WARREN BUFFETT LESSONS

Well, there's no better person to learn the lessons of investing from than the world's most successful investor which is why I found this week's episode of the PBS program "WealthTrack" to be particularly worthy of sharing. Her guest on the program is law professor Lawrence Cunningham who has become an expert on Buffett having authored several books on the Wall Street guru.  As has been the case for about two months now, there is no weekly summation being published by Barry Ritholtz anymore. Hope everyone had a great weekend.  It certainly has been a beautiful weekend.