After a quiet month of July, a bit of volatility was injected into markets during the first week of August. This small sell-off was long overdue, especially after hitting all-time highs in both the S&P 500 and Nasdaq just last week. In the trading session immediately following the sell-off, both indices filled the gap that was created and, as of now, all indicators point to standard selling during a bull market rally.
Earnings season continues to be strong with most large cap technology companies reporting better than expected results as well as improving guidance into the end of the year. As expected, AI is still front and center, showing no signs of fading away as companies attempt to maneuver their way to the front of the pack. Financials, Industrials, and even Utilities all made new all-time closing highs at the end of July, which should dispel the notion that it is only a few massive technology companies accounting for all the gains in the market.
Through all of this, sentiment remains muted as investors seem to be nothing more than cautiously optimistic over the V-shaped recovery since May. This caution may be partially attributed to the uncertainty surrounding the current administration’s economic policies, as well as the rising geopolitical tensions in both Europe and Asia. Regardless of what is causing it, a lack of excessive optimism is a good sign for a continuation of the current trend. With nearly every sector making new monthly all-time highs, the focus moving forward will be to find pockets of the market that are outperforming while staying nimble enough to adjust when sectors begin to rotate.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The content is developed from sources believed to be providing accurate information. The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly.. Stock investing includes risks, including fluctuating prices and loss of principal.