August Market Commentary
Stocks posted strong gains in August with U.S. large company growth stocks leading the way. In addition, large company U.S. and International stocks posted robust gains. On the other hand, bonds posted modest losses as investors sold bonds to buy stocks. As the economy continues to rebound from the devastation related to the COVID-19 lockdowns this spring, investors remain hopeful for a full economic recovery and a vaccine approval sooner than expected.
After another month of gains in the stock market amid an unprecedented health crisis and stalemate in Congress for an additional coronavirus package, we are asked why the stock market continued to rise in August? Much is being written about this topic. Besides the massive monetary stimulus from the Federal Reserve, we believe there are two additional reasons for continued strength in the stock market:
1. U.S. economic data is not as bad as feared
2. COVID-19 infections and deaths have been on a steady decline.
There were multiple economic statistics reported in August demonstrating continued strength in the economic recovery. In early August, the Bureau of Labor Statistics reported the economy added another 1.8 million jobs in July. This exceeded expectations and provides three straight months of improvement. Also, in early August, the Institute for Supply Management (ISM) Purchasing Managers’ Index for Manufacturing and Services indicated expansion in the overall economy for the third month in a row. Lastly, on August 21st, the National Association of Realtors reported a 24.7% increase in July sales of existing homes. While the pandemic and low interest rates have contributed to a strong housing market, these trends bolster the case for a healing economy. Another reason for August stock market gains is improving data regarding COVID-19 infections and deaths. After the daily number of COVID-19 cases peaked in mid-July near 75,000, daily cases have dropped significantly to approximately 30,000 by the end of August. In addition, the death rate from COVID-19 has slowed. While COVID-19 cases and deaths are arguably too high, investors remain optimistic the coronavirus pandemic can be contained, leading to a much stronger economy in 2021.
As we enter the final 60-day period prior to the November presidential elections, it is time for us to address what may be the most unpredictable outcome of the election – the timing of when we know who has won! In the 2000 presidential election, it took five weeks to declare the winner. During that time, the stock market suffered a correction while lawsuits were filed, and the Supreme Court became involved. While the infamous “hanging chad” became an issue, the outcome of this year’s election may likely come down to absentee ballots. These votes may be the largest in history, and these ballots may take longer to process and lead to market uncertainty. Since this appears to be a contentious election, we will not be surprised to see some drama in the final vote tally to determine the outcome of the 2020 presidential election.
Changes in the pace of economic recovery, vaccine development/approval and election results remain some of the driving forces in the markets. We believe volatility may accelerate in the fall season as these uncertainties manifest. Therefore, we advise staying focused on long-term goals and to avoid the distractions of daily news flow.
If there is any way we can help during these challenging times, please feel free to contact us at 513.791.9258!
Congratulations to Ryan McCarthy!
Ryan McCarthy joined 9258 Wealth Management in October of 2018. His exemplary work has led to his promotion to the role of Executive Vice President, Director of Operations. He will also join 9258 Wealth Management’s Directors Council.
Ryan is a graduate of the University of Cincinnati with a Bachelor of Business Administration.
Prior to joining 9258 Wealth Management, Ryan served 6 years with Fifth Third Securities. He began in operations on the trade desk, then management of the trade desk, and finally supervisor of the Principal Review Desk. Before that, Ryan spent 6 years at Fidelity Investments as a full trader and Stock Plan Services representative.
Welcome Nick Mason!
Nick Mason recently joined 9258 Wealth Management and will serve the firm in marketing, advertising, graphic design, and web development. He has worked with 9258 since its inception in 2018 as a contractor and is excited to transition to a full-time position.
Nick is a graduate of the University of Cincinnati’s College of Design, Architecture, Art and Planning (DAAP) where he earned a Bachelor of Science in Industrial Design. He participated in the Professional Practice Program, which alternates semesters of study and full-time work, resulting in two years of industry experience upon graduation. During this program he worked five different jobs in Rhode Island, Cincinnati, Toledo, New York City, and Los Angeles. He gained experience across a range of roles and responsibilities within design, marketing, advertising, social media, event production, and web development. Nick has worked with a diverse spectrum of clients including Google, Kroger, P&G, Netflix, US Bank, and Major League Baseball.
Nick grew up in the Northern Kentucky/Greater Cincinnati area. He currently lives in the Clifton Gaslight District and enjoys spending time with his family, friends, and local community. Nick spends his free time oil painting.