After a strong July, major U.S. equity indexes retreated slightly yet remained resilient in August. Treasury yields captured the market’s attention for much of the month.

Let’s make it three for the S&P! The second quarter of 2023 was the third consecutive positive quarter for the S&P 500 and the Dow Jones Industrial Average. The Nasdaq 100 was the biggest gainer of the three major indexes in the second quarter, with AI and large-cap tech fueling gains.

The recent market rally showed signs of broadening throughout July, with underappreciated sectors like industrials and transports filling the shopping lists of eager bulls.

If a trader or investor was trying to time the market in March during the regional banking panic, they more than likely would not have participated in the gains we just saw in June! Long-term investors stay the course with discipline.

Stock prices stumbled in February owing to growing worries that the Fed would maintain its tight monetary posture in the face of continuing inflation.

Stocks rallied in January as moderating inflation, a better-than-feared earnings season, and healthy economic data put investors in a buying mood.

The month began on a solid note as stocks rallied following the Fed’s announcement of a 50-basis-point hike in the federal funds rate. The market was relieved to hear comments from Fed Chair Jerome Powell, who said that a 75-basis-point increase was not actively being considered.

The month started out with the same anxieties that dragged the stock market lower in January and February: rising bond yields, slowing economic growth, elevated inflation, and Ukraine.

We understand that current events can be a bit overwhelming, and you may feel the need to be proactive. Contact us and we will discuss, but for now we will keep on riding. 

As investors saw in January, these high-multiple stocks can come under pressure as bond yields trend higher. The reason for this is twofold. First, when rates tick up, it’s more difficult to forecast future earnings. Second, higher rates may increase a firm’s cost of capital.