Today we tackle the stocks, market, and economic recovery news from the 3rd week of August.
Learn about the newly FDA-approved COVID vaccines within the ongoing Coronavirus Pandemic and how this affects market recovery in August 2021.
Also, discover remarkable July real estate numbers, a sneak peek of what we will cover in next week’s article.
Stocks & Market
The market dipped a little at the beginning of last week due to US military withdrawal from Afghanistan and low August activity.
By the end of Monday, August 23rd U.S. stock markets rallied after a lackluster last week. Crude oil prices have also rebounded. All three major stock indexes ended on a positive note.
- S&P 500 (^GSPC): +37.86 (+0.85%) to 4,479.53
- Dow (^DJI): +215.63 (+0.61%) to 35,335.71
- Nasdaq (^IXIC): +227.99 (+1.55%) to 14,942.65
- Crude (CL=F): +$3.29 (+5.29%) to $65.43 a barrel
- Gold (GC=F): +$21.90 (+1.23%) to $1,805.90 per ounce
- 10-year Treasury (^TNX): -0.5 bps to yield 1.2550%
“According to “bond kind” Jeffrey Gundlach, the Fed’s policies are still the predominant factor behind stocks’ continued march higher, with the central bank’s policies keeping bonds expensive relative to risk assets like equities.
“So simply, bonds are so overvalued versus the inflation rate and versus economic growth and other measures … they all suggest on a fundamental basis, the 10-year Treasury should be at least 100 basis points if not up to 200 basis points higher than it is versus economic and inflation fundamentals,” Gundlach said. “But it’s not there because of the Fed’s policy. As long as the stimulus goes on, the stock market can stay in very overvalued territory.”
In other words, bonds have been propped up by the Feds to encourage investment and activity in the market instead.
Investors are speculating which direction the Fed’s will take after their end of August retreat meeting in Jackson Hole, Wyoming. The possibility is runaway inflation, always a concern and likely to be addressed.
The big news in the Coronavirus world involves the legal designation of 2 key vaccines, adding to market recovery in August 2021.
“The Food and Drug Administration is working on full approval of the two-shot Covid vaccine made by Pfizer and BioNTech as soon as Monday, The New York Times reported, citing sources. The move would make it the first Covid vaccine to go from emergency use authorization to full FDA approval.
Concerning recovery, it is assumed more people will accept taking a fully approved vaccine as compared to the current emergency-use status. Also, private and public sector policies mandating vaccine use should be more accepted now that the vaccines are officially approved.
The service and manufacturing segments of the economy are still being affected by the ongoing health crisis. Yet, spending is robust, reflecting consumer optimism and significant market recovery.
Service and Manufacturing Sectors:
Activity in both the U.S. services and manufacturing sectors decelerated in July as the rapid spread of the Delta variant dampened overall growth.
“IHS Markit’s flash August services business activity index fell to 55.2 from 59.9 in July. This brought the index down to the lowest level in eight months. Readings above the neutral level of 50.0 indicate expansion in a sector.
The manufacturing activity index also fell more than expected to 61.2 from 63.4 in July. This marked a four-month low and came in below the 62.0 economists were anticipating.
An Optimistic Economy Overview for 2nd half 2021, according to gordcollins.com
“What’s most promising about the US stock market forecast is the savings of Americans and how they’re beginning to spend. Second-quarter vacation spending was up strong and indications are that 3rd and 4th quarters will be even better. Inflation is rising fast, but consumers don’t seem to care, other than regarding rising gasoline prices and utilities. Of course, back-to-school spending might reach $37 billion.
US wages are rising but not keeping up with inflation which is a positive for companies and investors. Inflation managed well could be a tailwind for investors and higher stock prices, given earnings reports are solid. Labor shortages are an issue for many companies but as workers return, it becomes less so.
Real Estate Market Recovery August 2021
The Real Estate market continues to burn hot, specifically in the Florida market. In the last year, the surprisingly healthy housing market helped wider recovery throughout most of the country.
“ For the second straight month in July, more consumers seem to be eyeing real estate. According to the National Association of Realtors (NAR), home sales rose by 2% to a seasonally adjusted 5.99 million units. This would mark a sizable lead over analyst expectations of a 0.5% decline and 5.83 million units.
7 qualities of the current housing climate in the USA:
- Low inventory
- Low construction numbers
- Low mortgage rates
- High demand
- High bidding wars
- High rental rates
- Quick sales closure
We will cover the staggering US Real Estate boom next week, focusing on the Florida market, which is of course our area of specialty at BAI Capital. The figures and activity are impressive and we can’t wait to share the vital numbers with you.
Today’s Takeaways: Market Recovery August 2021
The stock market is holding strong and the economy is showing consistent signs of recovery.
Full FDA vaccine approval, positive effects from the last 2 years of stimulus inputs, and a booming real estate market.3 solid markers that stand defiant against the looming Delta Variant threat and ongoing mutations.
All in all, investments in the US look very promising coming into the fall season. Market recovery in August 2021 looks solid.
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