August 2014

August Recap and What the Future Holds for Stocks

Analysts expect the August jobs report – due out this Friday – to reflect solid growth, showing an addition of 225,000 new jobs and a decrease of 6.1 percent in the unemployment rate. Overall, August has been a pretty good month in terms of economic performance. The S&P 500 has shown an increase of 3.8 percent last month which is its best August performance in 14 years. The S&P 500 also, according to MarketWatch, achieved its largest monthly percentage jump since February, when it rose 4.3 percent.

Last Friday (Aug. 29) saw the S&P rise 0.3 percent or 6.63 points, closing at 2,003.37, its 32nd record close so far this year; the Dow Jones Industrial Average rose 18.88 points, or 0.1 percent, closing at 17,098.45; and the Nasdaq Composite increased by 0.5 percent or 22.58 points, to close at 4,580.27. MarketWatch noted that this is the tech-heavy index’s highest finish since March 29, 2000. According to Forbes, the most actively traded stocks include RadioShack (RSH) up 13.29 percent, Apple (AAPL) up 0.31 percent, Bank of America (BAC) up 0.38 percent, and Twitter (TWTR) which more or less stayed the same.

MarketWatch reported that for the last trading week of August “the S&P 500 tacked on nearly 0.8%. The Dow scored advances of 0.6% for the week and 3.2% for the month, while the Nasdaq climbed 0.9% for the week and 4.8 percent for the month.”

The economy may have weathered waves last month, not least among them trouble between Ukraine and Russia and the Eurozone’s discouraging inflation data, but the economy remains steadfast. According to MarketWatch, David Lafferty, chief markets strategist for Natixis Global Asset Management, had this to say: “We’ve had more waves, but the underlying current is still pretty good,” with the U.S. seeing largely positive economic data and “pretty solid” second-quarter earnings.  James Liu, global markets strategist at J.P. Morgan Funds, concurs, stating that August was “a very strong month in terms of performance.” He noted that investors waiting for a drop in stocks before buying didn’t get a chance to do so as a steep decline never happened. The S&P 500 pulled back 4 percent from late July to early August, but then rallied to new records.

Moving forward, Lafferty feels quite optimistic. “Stocks are likely to keep advancing through year’s end thanks to earnings growth, though gains won’t be as strong as in the past few years,” he said. “Our outlook is for stocks to continue to grind higher.”

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