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August 2021 in Review

Daniel Zeigler, CFP, CMFC, Portfolio Manager

 

 

Hi everyone, this is Dan Zeigler, Portfolio Manager at Midland Wealth Management. I wanted to provide everyone with a quick recap for the markets for the month of August.

The equity market continued to trend higher, as the S&P 500 notched its 7th straight winning month and was up 2.9% for the month, with the tech-heavy Nasdaq Composite leading the way, up 4%. In fact, the S&P 500 notched its 53rd record close in 2021. The equity market rally and valuations has been supported by robust corporate earnings growth and hopes the reopening and recovery remains intact. Financials were also a leading sector this month with a gain of about 5%.

All eyes were on Chairman Powell last week as he spoke at Jackson Hole and indicated the Federal Reserve could begin reducing its monthly bond purchases later this year, though it wouldn’t be in a hurry to begin raising rates. Investors took this news in stride and the market was able to rally, avoiding any hint of the so-called 2013 “tantrum”, when the Fed surprised the market by reducing their bond purchases quicker than thought. Investors will also be keeping a close eye on the next Federal Reserve meeting in September for any additional comments about bond tapering.

Home prices continue to surge around the country due to strong demand and persistently low supply and have broken records as home prices rose 18.6% annually in June. Prices are now 41% higher than their last peak during the housing boom in 2006.

Investors will be watching this Friday’s jobs number ahead of the Labor Day weekend as economists are expecting the economy to create 750,000 jobs and the unemployment rate to fall to about 5.2%. We continue to see good economic data; however, the Citigroup Economic Surprise Index has been trending lower lately, which basically means economic data releases are missing forecasts to the downside. Also, U.S. consumer confidence fell sharply below estimates to a 6-month low as surging COVID-19 cases dampen confidence as consumers were less inclined to buy a home or a big-ticket item like vehicles, however they were still planning on going on vacations.

Thanks for joining me today for a brief update for the month of August and I hope everyone has a great Labor Day weekend.