4 more trading days and August will be in the rear-view mirror.
The S&P 500 is down (3.74%) for the month. The Nasdaq is off (4.65%) and the Russell 2000 is down (7.49%).
The yield on the 10-year US Treasury has risen from approximately 3.9% at the end of July up to 4.23% as of last Friday.
Earnings seasons is just about over with corporate profits shrinking around (5.2%), better than expected, however still down.
Last week the 2 major announcements came in as expected. Nvidia hit the ball out of the park with earnings and forward guidance. Fed Chair Jerome Powell’s Jackson Hole speech did not contain anything new. The Fed will continue to be data dependent for the foreseeable future.
Many, including myself, expected a stock market pullback in August. Let’s hope that September has stocks moving higher with bond yields contained.
Inflation
Going forward, the month-to-month readings on Inflation will have heightened importance. Last month the CPI rose .2% for the month of July. .2 times 12 equals an annualized rate going forward of 2.4%, close to the Fed’s target. If we continue to have readings similar on a consistent basis, that will go a long way tempering the Fed’s desire to hike rates higher from here.
Let’s face it, we need to have inflation stay low from here going forward. Data reported will have even greater importance in the short-run going forward.
This week we’ll hear the Fed’s preferred inflation reading, the Personal Consumption Index on Thursday, followed by the July August Employment report on Friday.
S&P 500 Sector Performance
Out of the 11 sectors that comprise our S&P500, 5 are higher and 6 are lower so far in 2023.
Leading the pack on the upside, is Communications, 38.5%, followed by Information Technology, up 37.9%. Rounding out the up sectors are Consumer Discretionary 29%, Industrials up 8.18% and Materials 3.77%.
To the downside, the leader is Utilities, down (10.27%), followed by Consumer Staples, off (2.47%), Healthcare (2.11%), Real Estate, Financials and Energy all down around (1%).
Stretch Run
After Labor Day, the year always seems to accelerate to New Years Day. My hope for the economy and markets, is inflation continues to improve, corporate profits have in fact bottomed and we have a soft-landing from the elevated interest rate environment.
Let’s keep in mind, the markets do love to climb that “wall of worry”. When everything in the economy is not perfect, we continually look for ways for improvement which typically pushes markets higher over time.
Enjoy the remainder of your Summer!!
