Any Gains for August? | August 5, 2022

AUTHOR: Jason J. Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO

Three straight weeks of gains nearly stalled on Friday. Does last week tell us anything about the rest of August?

Monday   S&P 500 0.28% | NASDAQ 0.18%

Equity markets struggled to find a north on the 1st day of trading in August. After such a strong July, it was not surprising. Earnings season dominated the trade on the day.

Tuesday   S&P 500 0.67% | NASDAQ 0.16%

Markets moved marginally between gains and losses all day. There was a political visit to Taiwan that escalated tensions between the US and China. Three key Federal Reserve Board (FRB) Governors were vocal on Tuesday about how far rates still needed to go. This likely carried more weight on the day’s trade. FRB governor comments are typically coordinated and used as a messaging system for the broader FRB approach.

Wednesday   S&P 500 1.56% | NASDAQ 2.59%

The market surge started early and stayed through out the trading day. The gains were strong enough to wipe out the early losses from the beginning of the week. ISM Services showed a large surprise to the positive. This is a solid indication of a bounce in consumer activity in the third quarter. Additionally, to the same end, factory orders surprised to the north.

Thursday   S&P 500 0.08% | NASDAQ 0.41%

On Jobs Day Eve, markets ended the day mixed. Initial claims pointed higher. An indication that jobs data may disappoint on Friday. Also, inflationary pressures from the oil markets appear to be diminishing. Oil prices moved under $90/barrel for the first time in since Russia invaded Ukraine.

Friday   S&P 500 0.18% | NASDAQ 0.50%

Happy Jobs Friday! A good report resulted in weak markets. This was not shocking as the signal means a clear runway for FRB tightening. The economy added 528K jobs and the unemployment rate fell to 3.5%. Average hourly wages increased by 5.2% YoY. This is lower than the pace of inflation, but historically strong.

Conclusion   S&P 500 0.36% | NASDAQ 2.15%

Thinner trading is expected for August, which is historically a weaker month of the year. It is likely that the month will not follow past trends given the better than expected earnings and economic data. Additionally, the weak start to the year may yield a more opportunistic August.

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Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long-term holding strategy is the best strategy in any market environment.
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