However, the divergence between U.S. stock performance—up $1.9 trillion in 2018—and foreign markets may make investors uneasy.
Was Scott Minerd patently wrong earlier this month with his bearish predictions for the U.S. stock market, as Wall Street rises to fresh records and continues to outperform international peers by a wide margin?
This isn’t a rhetorical question, but a genuine query as Wall Street investors enter the final throes of the dog days of summer.
About two weeks ago, the chief investment officer of Guggenheim Partners wondered aloud, via Twitter, whether the market’s optimism about stocks was misplaced: “If there were ever a moment to harvest gains and reduce risk, it is August 2018. And if it turns out not to be the moment, I don’t think you are giving up much upside,” Minerd wrote.
With one full week remaining, the Dow Jones Industrial Average DJIA has gained 1.5%in August, the S&P 500 index SPX is up 2.1%, and the Nasdaq Composite Index COMP has advanced about 3.6%.
To be sure, those gains could be swiftly eradicated, particularly during a low-volume stretch in the market that is easily influenced by the vagaries of headlines on tariffs, White House drama and other perceived maladies that are buffeting regions of the globe. That said, the recent advances appear to be nothing to turn one’s nose up at.
At its current pace, stock benchmarks are poised to produce the best August returns—a notably volatile month—in four years.
On top of that, the S&P 500 on Friday booked its first record close since Jan. 26 and the Nasdaq Composite and small-capitalization Russell 2000 index RUT joined the broad-market benchmark at all-time highs.
What’s more, the Dow Jones Transportation Average DJT is 1.3% short of its all-time peak hit on Aug. 21, while the Dow is 3.1% shy of its Jan. 26 record top, which ought to provide some comfort to Dow theorists who believe that the tandem moves of Wall Street’s oldest gauges can provide bullish and bearish clues about the market’s outlook.
Sectors that had underperformed at the start of August picked up steam in the month, with consumer discretionary XLY among the best performers among the S&P 500’s 11 sectors so far this month, along with telecommunications, information technology and health-care stocks also rising