The stock market rallies like it’s 1986.
August has been a good month for stock investors. At the end of last week, the S&P 500 Index was up 6.8 percent for the month. The Index is poised to deliver its best returns for the month since 1986, when it gained 7.1 percent, reported Financial Times.
The performance of U.S. stock markets is remarkable, in part, because, so far, company earnings – the profit that publicly-traded companies earn and report each quarter – haven’t been great in 2020. Earnings were down 31.9 percent during the second quarter of the year, reported FactSet. The decline in earnings reflected the impact of coronavirus closures.
Weak second quarter earnings had little impact on U.S. stocks, however. Instead, investors appeared to focus on ‘upside earnings surprises.’ That term is used to describe companies with earnings that exceed analysts’ expectations. During the second quarter, 84 percent of companies in the S&P 500 beat analysts’ estimates.
FactSet reported other factors have been cited to explain the upward trajectory of stock markets, as well. These include:
The list should also include the Federal Reserve’s strategy for inflation and employment, which was announced last week. Randall Forsyth of Barron’s reported:
“In practical terms, the central bank’s current policy of near-zero interest rates and heavy purchases of Treasury and agency mortgage-backed securities will continue as long as unemployment remains elevated. The chasm between a Wall Street at record levels and a Main Street in a near-depression will persist as a result.”
Last week, the Standard & Poor’s 500 and Nasdaq Composite Indices chalked up a fifth consecutive week of gains, while the Dow Jones Industrial Index moved into positive territory for 2020.
Could you pass the American citizenship test? It’s not easy to become an American citizen. In fact, newly-minted citizens may know more about the history of the United States than many of us who were born here. In 2018, a national survey reported just one-in-three Americans scored 60 percent or better on a multiple-choice test that included questions from the U.S. Citizenship Test.
See what you know about the United States by taking this brief quiz:
Weekly Focus – Think About It
“When humor goes, there goes civilization.”
--Erma Bombeck, Humorist, writer, columnist
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* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
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https://www.ft.com/content/9cc779aa-d4b3-48d9-8878-f6690b4e34f3 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-31-20_FinancialTimes-US_Stocks_Head_for_Best_August_Since_1986-Footnote_1.pdf)
https://insight.factset.com (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-31-20_FactSet-Market_Synopsis-Footnote_4.pdf)
https://www.barrons.com/articles/the-fed-unveils-its-everything-old-is-new-again-monetary-policy-51598638387 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-31-20_Barrons-The_Feds_New_Policy_Means_Rates_will_Stay_Lower_Longer-Footnote_5.pdf)
https://my.uscis.gov/en/prep/test/civics/view (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-31-20_USCIS-Civics_Practice_Test-Footnote_8.pdf)
https://www.nytimes.com/interactive/2019/07/03/us/us-citizenship-test-quiz.html (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-31-20_TheNewYorkTimes-Quiz-Can_You_Answer_the_Hardest_Citizenship_Test_Questions-Footnote_9.pdf)