August threw all kinds of challenges at stocks, and stocks retreated from them. The index slipped 3.13% during the poorest month for U.S. equities since May 2012. Most of August’s best economic indicators arrived in the first half of the month. Read more in our September economic update.
Basically, U.S. stocks just achieved about two years of gains in seven months. This begs a question: how much higher can the S&P 500 climb this year? When 2013 started, especially bullish analysts thought the index might hit 1,700 before 2014 arrived. At the start of August, it was already at that level. When the market is this hot, warnings of a pullback or a correction reliably appear – and they certainly have, but few investors seem to be paying much notice to them. With luck, 2013 could wind up a truly exceptional year for Wall Street. Read more in our August economic update.
Sometimes the direction of the stock market can change on a few sentences, even a few words. That was certainly the case on June 19, when Federal Reserve Chairman Ben Bernanke mentioned the possible end of QE3 in 2014 and the prospect of reducing the central bank’s monthly bond purchases later in 2013. Still, the major U.S. indices fared pretty well compared to foreign benchmarks. June brought a lot of good news about the economy. Consumer confidence rose in June– the month’s final survey from the University of Michigan came in at 84.1, approaching a six-year peak. Inflation was again trivial: the Consumer Price Index had advanced just 0.1% for May and but 1.4% in a year. Read more in our July economic update.
What really improved in May was consumer confidence. May brought more record closes for the Dow, more affirmations of the housing comeback, more household confidence, and certainly more volatility as investors wondered if the Federal Reserve might soon do less. Read more in our June economic update.
When was the last month in which stocks did not advance? Last October. If it seems like a distant memory, credit the Federal Reserve, a decent Q1 earnings season and a prevalent optimism. Read more in our May economic update.
Stocks just couldn’t be stopped in March. The S&P 500 rose 3.60%, all the way to a new record close of 1,569.19 on March 28. The Dow and Russell 2000 reached all-time peaks as well. Even with sequester cuts affecting the federal budget and the payroll tax holiday a memory, the Commerce Department’s latest consumer spending data showed Americans spending, saving and earning more. Read more in our April economic update.