Markets mostly higher. The S&P 500 Index and Nasdaq opened higher after a mixed close on Monday, with the Nasdaq making yet another new high. The S&P 500’s lower close broke a seven-day win streak and six consecutive all-time highs. Strong manufacturing data out of China is in the headlines, along with US manufacturing data later today. Asian markets finished mostly higher, while European equities are mixed through midday trading.
Fed speech signals rates probably raised too quickly. Was President Trump right that the Federal Reserve (Fed) had raised rates too quickly in the last cycle? In light of the new inflation targeting strategy introduced by Fed Chair Jerome Powell at last week’s Jackson Hole, WY, conference, the answer is they probably were. For our analysis of the implications of the Jackson Hole speech for rate hikes past and future, see today’s LPL Research blog.
Best August in 36 years. In the end, the S&P 500 had its best August since 1984, while also gaining for the fifth consecutive month. Over these five months it gained 36%—yet another record. This opens the door to September, the worst month of the year historically, which we discussed Monday on the LPL Research blog.
What happens if Trump wins? LPL strategists discuss August’s surprising numbers, what September may bring, and the potential market impact if President Donald Trump wins reelection. Check out the new Market Signals video, What happens if Trump wins?
Technical update. The Dow Jones and S&P 500 lost ground Tuesday, but that didn’t stop the Nasdaq from gaining an additional 0.7%. While US large cap growth equities remain one of the strongest groups in the world, the recent run may be stretched near-term. The Nasdaq Composite is now 27% above its 200-day moving average, the most since 2000.
COVID-19 news. The trend in the seven-day average of new cases remained in place with a 3% week-over-week decline through Monday, matching Sunday’s number. But Monday’s daily case count was 8.7% below the week-ago level, while hospitalizations dropped 22% from the prior week, indicative of solid progress (source: COVID Tracking Project). Treasury Secretary Steven Mnuchin is hopeful Republicans will release a new coronavirus relief bill next week.
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