In a refreshing turn of events, major U.S. stock indexes began the week on a high note, rebounding for the second consecutive session and partially recovering from the summer’s stock-market slump. The surge was widespread, with 10 out of the S&P 500’s 11 sectors concluding in positive terrain. Notably, the S&P 500 managed to record its first consecutive gain of the month following a downward trajectory throughout most of August.
This uptick underscores a remarkable period of tranquility for major indexes during the summer months, with the S&P 500 steering clear of a one-day move of 2% in either direction for over half a year – the most serene stretch since 2018 and one of the most prolonged in the past quarter-century, as per research firm Asym 500. This calm comes amidst investor predictions of continued market ascendance in the coming weeks, spurred by impressive corporate earnings and encouraging economic data.
U.S. STOCK INDEXES CONTINUE UPWARD TRAJECTORY, RECOVERING SUMMER LOSSES
Major U.S. stock indexes began the week on a positive note, with the S&P 500 marking its first consecutive gain of the month, thus compensating for some of the losses incurred during the summer stock-market slide. The S&P 500 saw a 0.6% rise, while the tech-centric Nasdaq Composite enjoyed a 0.8% increase. The Dow Jones Industrial Average also added 213 points, amounting to a 0.6% growth.
A SUMMER OF CALM FOR MAJOR INDEXES
This week’s growth continues a remarkable period of stability for major indexes during the summer months. According to research firm Asym 500, the S&P 500 has not experienced a one-day move of 2% in either direction in over six months, marking one of the longest calm stretches over the past 25 years and the calmest since 2018.
RISING OPTIMISM AMONG INVESTORS
The upswing has fueled optimism among investors, with some expecting the upward trend to persist. Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, expressed his positive outlook on the market, citing impressive corporate earnings and economic data. He showed particular optimism about sectors like industrials and financials.
PERFORMANCE OF SMALLER COMPANIES AND INDUSTRIALS
The Russell 2000 index, which represents smaller companies, outperformed the S&P 500 with a 0.8% rise. Shares of industrials companies such as Tractor Supply also exceeded the index. This trend indicates increasing confidence among investors in the domestic economy’s resilience, despite heightened interest rates.
INFLATION AND JOB DATA IN FOCUS
Investors will be closely monitoring inflation data and the monthly jobs report in the coming days for further insights into the economy’s health. For now, many seem to adopt a more optimistic stance. "The soft landing is the consensus now," said Zhiwei Ren, a portfolio manager at Penn Mutual Asset Management.
CONCLUSION AND TAKEAWAYS
Overall, the US stock market reflects a resilient domestic economy and positive investor sentiment, despite higher interest rates. The performance of smaller companies and certain sectors such as industrials indicate a broader-based recovery. However, the upcoming inflation data and jobs report will provide critical insights into the economy’s trajectory, and any unexpected data could sway investor sentiment and market trends.
