The U.S. markets avoided the summer doldrums this August, with the S&P 500 and Nasdaq Composite setting records, while the Dow Jones Industrial Average officially exited correction territory, putting it within striking distance of its record high set in January.
Last week, U.S. markets entered their longest bull run in history. The last trading week of August can be quiet, and volatile, with traders taking a final summer vacation, but according to JJ Kinahan, chief strategist at TD Ameritrade, there is a very low probability that the markets’ gains will be erased, and August will conclude as a positive month for U.S. stocks.
How good has August been?
As of Monday, the Nasdaq Composite was up 4.5 percent this month, and is on track to post its largest monthly gain since May, when it rose 5.32 percent. The Nasdaq is on track for its fifth consecutive monthly advance, its longest winning streak since January, when it gained for seven months in a row, according to data from The Wall Street Journal Markets Data Group.
The Dow Jones industrial Average was up about 2.49 percent. In July, the Dow gained 4.7 percent. Following the past few months of gains, the major stock market index is close to rescaling its record high of just more than 26,616 points reached at the end of January 2018.
The S&P 500 is on track to finish the month up 2.8 percent, following August’s 3.6 percent advance. The broad-based stock market index could finish higher for its fifth-straight month, its longest winning streak since January when it gained for 10 consecutive months.
Of the S&P 500 sectors, information technology is the best performer, up 5.6 percent month to date. Telecommunications is the second-best performer up 4.95 percent. Energy is the only sector negative month to date, down 3.09 percent as of Monday. It is poised to snap a five-month streak of gains.
Commenting on the markets’ August strength, Kinahan told FOX Business that ,“The market continues to do well with strong earnings boosting us to new highs, what’s surprising is that we’re doing so without the FANG stocks leading. It’s impressive that we continue to see buying strength under any circumstance and hit new highs.”
Going forward, if investors are looking for developments that could negatively impact the markets, then they should keep the strength of the U.S. dollar and tariffs on their radar, while also watching Brexit. But, he noted that, “As they say in boxing, it is the punch that you didn’t see that knocks you out.”