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The arrival of September usually means new school supplies and investment ideas, but for now Wall Street expects more of the same, and that may not be a bad thing.
He
S&P 500
has risen 21% this year and while few on the street expect it to continue to rise at such a rapid pace over the last four months of the year, there is little reason to doubt that stocks will continue to go up despite what it happens in other parts of the world.
Need proof? Over the past week, much of the east coast has been hit by the remnants of Hurricane Ida. Many lost their homes and others remain without electricity, and yet stock market indices reached new highs.
Then on Friday, the Department of Labor announced that in August there were 235,000 jobs added to the economy, well below the 750,000 forecast by economists. The market, which came out of Thursday’s highs, mixed with the S&P 500 slightly lower at 4535.43, the
Dow Jones industrial average
a 0.2% discount to 35,369.09 and the
Nasdaq Composite
increased 0.2% to a record high of 15,363.52. During the week, the Dow was down 0.2%, while the S&P 500 was up 0.6% and the Nasdaq was up 1.5%.
Instead of being frightened by the prospect of a slowdown in economic growth, Wall Street seemed to take the weaker-than-expected figures as confirmation of concerns about how the Covid-19 Delta variant would affect economic activity. . And with indications that the Delta variant has reached, or at least is close to, the maximum levels in some parts of the country, the market is willing to look at the August work figures further, mainly because it means that it is the Federal Reserve is less likely to reduce its short-term purchase program.
This job report “shows the ebb and flow of volatile data,” said Dave Donabedian, chief investment officer of CIBC Private Wealth Management De Barron, noting that we saw a similar shortfall in April only to see recruitment rebound in subsequent months.
As for where to put money, there is little reason to stop what has been working, even if the road may become more rocky. “The S&P 500 will be marginally higher by the end of the year, but global market volatility will increase,” Donabedian said.
So far, investors seem to be fine with that, Baird market strategist Michael Antonelli said De Barron that customers have been “unusually quiet on the front of ‘what should I do’?” In the short term, it will pay attention to the September and October employment figures, which should show more labor earnings as additional unemployment benefits are exhausted and more parents return to the workforce as schools enter a new normal for the pandemic.
For investors who are not content to sit on their hands, there are sectors that deserve a closer look, he said. Discretionary consumer is an area that may have more juice as the economy returns to normal in 2022. There are also reasons to stay selective with technology trade, as many names, especially in software, have proven to be as relevant in a post-pandemic world as in a world of work from home. Of course, no one should expect sectors to grow as much as they have since the middle of last 2020.
Antonelli also still likes plays. Millennials have entered their peak years of home buying at a time when rates are low and it is a trend that should continue. And while spending in the pandemic’s nesting phase may end, recent storms may make people think about how to better protect their homes, providing gains to other players in the housing space.
Of course, no one would blame an investor for enjoying the holiday weekend and parking at an index.
Write to Carleton English to [email protected]