Since our last Market Insights update, the S&P 500 made several new highs and even made it to thirteen straight weeks with a new high. The Nasdaq crossed 15,000 for the first time and the largest companies have recently outperformed the S&P 500, including Microsoft, Alphabet (aka Google), Amazon, and Facebook.
Typically, the month of August has not been friendly to equity investors. Even though we have seen eight new all-time closing highs for the S&P 500 during August alone, the daily give and take has left the index flat month-to-date. Still, the number of record closing highs have been quite impressive this year. Last Monday’s closing high was the 49th year-to-date. With no significant pullbacks, this leaves the index up 18.4% on a total return basis as of yesterday’s close.
The S&P 500 continues to make new highs, with the market up over 17% this year (including dividends) and up about 38% over the past 12 months. The Dow Jones Industrial Average is around 35,000, while it touched 30,000 for the first time this past November.
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Although it has not been a straight path higher, the S&P 500 index has logged 29 new record closing highs year-to-date. Retail investors have perhaps been emboldened, as the financial channels continue to spotlight the parabolic moves of latest “meme” stock(s) targeted by the WallStreetBets and other Reddit crowd traders.
Inflation concerns are rising. So, for this newsletter, we will focus on consumer inflation and the CPI, or Consumer Price Index. There are many variations of CPI, including month-over-month, year-over-year, seasonally adjusted, and with or without food and energy prices.
Year-to-date, the equity markets continue to show positive momentum, reflecting growing signs of the economic recovery and rising expectations for corporate earnings. The S&P 500 is up 11.5% year-to-date as of yesterday’s close.
Looking at 1-year returns, we are at an extreme moment in time. While the closing low for stocks in 2020 came on March 23rd, the 1-year returns from March 16th are still impressive: large cap, mid cap, small cap, and international stock indices have generally gained 60% or more. Treasury bonds, viewed as the safe haven, have not fared well due to rising interest rates. While the price of gold has increased over the past year, relative to the S&P 500, the performance is near the 10-year low seen in 2018.
Month-to-date, February’s stock market performance has certainly been making up for January’s disappointing end. There are several reasons for the equity market’s overall optimism, all of which point toward better days ahead for the economy.
While the expression often goes “time is money,” at Buckingham Advisors we believe a more fitting expression would be “money is time.” No one can have more time, and money cannot directly buy happiness, but having more wealth could allow you to focus more of your time on what you enjoy. Money is a tool, not something to be loved or feared in and of itself.