As the US tapering debate deepens and a coronavirus resurgence delays reopenings in some places, concerns about an overburdened stock market grow.
The stock market euphoria subsided on the last day of trading in August as investors assessed whether the high valuations could withstand the fading of the momentum from the pandemic era.
The S&P 500 fell as European stocks fell on signals that the region’s central bank will begin discussing a reduction in bond purchases. A decline in financial firms weighed on sentiment after Bloomberg News reported that Wells Fargo & Co. are risking regulatory action over the pace of refunds. Tuesday’s data showed a decline in consumer confidence and the largest increase in home prices in more than 30 years.
American stocks still saw their seventh straight monthly rise – their longest winning streak since January 2018 – amid strengthening strong corporate earnings and moderate monetary policy. With the debate about tapering off at a time when a coronavirus resurgence is delaying reopenings in some parts of the world, there have been concerns about an overstretched stock market. The S&P 500 is currently trading near its highest valuation level since 2000.
“The markets are taking a little breather,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. After making it through strong economic data and stellar corporate earnings, “The markets are now trying to deal with, Well, what’s next?”
According to Bloomberg data, 14 streaks of seven months or more have occurred for the S&P 500 in the past 60 years. The history indicates three results for the meter after reaching such milestones.
Five of them ended the next month when the index fell. Another four were followed by gains of no more than 3.2% before the streaks ended. The other five delivered advances of 9.7% or more before closing – including the most recent streak, which lasted 10 months and ran through January 2018.
Corporate insiders whose purchases correctly signaled the bottom of the bear market in March 2020 are not afraid to chase the record-breaking rally. More than 1,000 executives and officials bought shares in their own companies this month – most since May last year, according to data compiled by the Washington Service.
Some company highlights:
- Zoom Video Communications Inc. slumped after the home favorite made a sales forecast that fell short of analysts’ estimates.
- Chinese game-related stocks listed in the US rebounded from Monday’s decline, with NetEase Inc. and Bilibili Inc. rallying.
- Moderna Inc. climbed after a study showed its Covid-19 vaccine produced more than twice as many antibodies as a similar shot from Pfizer Inc. and BioNTech SE.
- Allbirds Inc. is moving forward with an IPO and expanding beyond the wool sneakers that have become Silicon Valley’s unofficial shoes.
Here are some key events to watch this week:
- OPEC + meeting on Wednesday output
- Eurozone production PMI on Wednesday
- U.S. employment report Friday
Some of the key moves in the markets:
- The S&P 500 fell 0.2% at 3:15 p.m. New York time
- The Nasdaq 100 fell 0.1%
- The Dow Jones Industrial Average fell 0.2%
- The MSCI World Index has hardly changed
- The Bloomberg Dollar Spot Index has barely changed
- The euro was barely changed at $ 1.1808
- The British pound was barely changed at $ 1.3752
- The Japanese yen was little changed at 110.00 per dollar
- The 10-year Treasury yield rose two basis points to 1.30%
- Germany’s 10-year yield rose six basis points to -0.38%
- UK 10 year yield rose 14 basis points to 0.71%
- West Texas Intermediate crude oil fell 1.1% to $ 68.42 a barrel
- Gold futures rose 0.3% to $ 1,817.70 an ounce