We hope you're doing well and staying safe as we move into September. August was a fantastic month for the markets but September hasn't shaped up too well thus far:
A full recap of the week's events is linked in the Market Insights document, below.
Large cap tech names were certainly due for a pullback, though the dip was short-lived. Energy stocks were also down smartly, mirroring the drop in oil prices. Interestingly, the disconnect between equity prices and the real economy was evidenced yet again, but this time the news was good and stocks declined. Large company stocks in developed international markets actually fared well, gaining 1.4%; the dollar also advanced modestly against foreign currencies. Inflation is starting to perk up a bit, but the underlying price gains were not too broad, concentrated mostly in used car and truck prices. Mortgage applications and refinancings continued to edge higher, driving the year-over-year comparisons through the roof (so to speak).
September is historically a difficult month for equities, but it's safe to say that the usual trends and conventions probably don't apply in 2020. The election cycle is shaping up to be particularly unpleasant, as positions harden and the rhetoric gets hotter. At this point the markets appear to be pricing in a Biden victory with Republicans retaining control of the Senate, an outcome that Wall Street would welcome. Much can change between now and November 3rd, however, and we will be watching for possible changes to this predicted outcome.
In the mean time, we wish you good health and prosperity. Stay safe, and please don't hesitate to reach out to us should you have any questions or to schedule an account review.
FMA ADVISORY, INC.