August brought an overwhelming natural disaster, a threat of war from a foreign dictator, and violence in the streets – so it is little wonder stocks went sideways. However, the S&P 500 did manage to squeeze out an advance of 0.05% for the month and investors hung on through the turbulence. The two other major stock benchmarks fared better as the Nasdaq rose 1.27% followed by the Dow Jones at 0.26%. (1)
AMERICANS ARE SPLURGING
Americans were “spent” their summer. As Americans are feeling more optimistic about the state of our economy, they started opening up their wallets. July’s gain in personal spending improved 0.3% as consumer incomes outpaced at 0.4%. This seemingly threw a lifeline to struggling retail sales where July was their best month in some time, putting a damper on what has become known as the “Amazon Effect”. (2,3)
An imbalance between supply and demand continues which kept home buying in check in August. The National Association of Realtors stated that existing home sales fell for a second straight month back in July, slipping 1.3% to the lowest annualized rate of 2017. The cause can be traced to two year-over-year developments: a 9.0% reduction in the supply of homes on the market, and a 6.2% rise for the median sale price ($258,300 in July). (3,4)
September will bring many trials and tribulations for the markets. There will be many tensions in Washington, the North Korea threat remains, and the Federal Reserve may begin shrinking its $4.5 trillion bond portfolio before the third quarter ends. (5)
In spite of these obstacles, there were many positive economic fundamentals last month including improvements in consumer confidence and consumer spending, continued strength in manufacturing, and a comeback for retail sales. Wall Street’s confidence has been hard to shake for some time now, and this next month will be another short-term test for the markets.
1 - barchart.com/stocks/indices#/viewName=performance [8/31/17]
2 - marketwatch.com/economy-politics/calendars/economic [8/31/17]
3 - investing.com/economic-calendar/ [8/31/17]
4 - inman.com/2017/08/24/existing-home-sales-dip-for-second-month-in-a-row/ [8/24/17]
5 - cnbc.com/2017/08/09/september-market-surprises-that-could-be-spookier-than-north-korea.html [8/9/17]
This post has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Bob Lawson is not engaged in rendering legal or accounting services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.