August has often been a good month for stocks, and the eighth month of 2014 was no exception. Most U.S. indicators signaled a healthier economy, perhaps one strong enough to motivate the Federal Reserve to raise interest rates a bit sooner than forecast. If households were retaining more of their incomes than expected, they were also more confident in August than they had been the previous month.
Developments on the last day of the month rattled Wall Street. The blue chips lost 317 points on July 31 (the Dow’s worst day since February 3) while the S&P 500 sank 39 points. The S&P lost 1.51% in an eventful month in which the Fed set an exit plan for QE3, a pair of geopolitical events troubled global markets, and U.S. economic indicators looked pretty good even as earnings were mediocre.
A geopolitical crisis in the Middle East didn’t halt the advance of U.S. stocks in June. Indicators did much to bolster investor confidence – the housing market seemed to have pulled out of its winter slump, and households felt better about the economy. Read more in our July economic update.
More buying than selling, and not much fear – that is the simple summation of May on Wall Street. Consumer confidence? It was difficult to get a bead on it in May, as the two most respected polls told different stories. Read more in the June economic update.
So far, it looks like Wall Street is on pace for … well … exactly the kind of year analysts thought it would have. Can stocks find fresh tailwinds in May? Will investors opt to buy rather than sell given some solid fundamental indicators of late? There definitely seems to a sentiment that the U.S. economy is growing stronger and stronger, and improving jobs data and a spring pickup in home sales would add to that perception. Read more in our May economic update.
Domestically, some very good news emerged on a few fronts. Consumer spending and consumer incomes were both up 0.3% for February, echoing the (revised) January increases earlier reported by the Commerce Department. February also saw retail sales improve 0.3% – the first gain in three months. Households didn’t have to contend with much inflation, and for that matter wholesalers didn’t either. However, March marked the end of the first quarter, and it was a mediocre quarter for stocks with the S&P 500 rising little more than a percent. Read more in our April economic update.