Like Superman, the S&P 500 Index seems unstoppable. Nothing, not the Federal Reserve, not the delta variant, not even old-fashioned fear and greed, can slow its rise. Of course, you just haven’t found your kryptonite.
is not just that the stock market is performing well: the Dow Jones Industrial Average rose 352.51 points, or 1%, to 34,786.35, while the Nasdaq Composite Index rose 1.9% to 14,639.33, and the Standard & Poor’s 500 Index rose. 1.7% to 4352.34. All three set a record this week.
The S&P 500 index closed Friday for the seventh consecutive high, the longest gain since 1997. After rising in June, the index rose for the fifth consecutive month, the longest increase since August 2020. The index also rose for the fifth consecutive quarter in the second quarter of 2021, which was the longest consecutive increase since the fourth quarter of 2017. The 14.4% increase in the first half of the year was the best level since 2019 and the second highest since 1998. These numbers are clearly strong.
After the strong employment report on Friday, all eyes are on
the continued quarterly growth of the Fed is particularly impressive. The S&P 500 Index hasn’t just risen for five consecutive quarters. It has risen more than 5% for five consecutive quarters, which is the second time the index has accomplished this feat since 1945.
According to Paul Hickey, founder of Bespoke Investment Group, the last time was in 1954, when the Federal Reserve was also trying to get rid of the period of ultra-low interest rates. Although the first consecutive bases ended, he did not end in bankruptcy. Yes, Time magazine put the bull market on the cover of January 10, 1955, and the S&P 500 index quickly rose for the sixth time. However, the index rose by 1.7% at the end of the quarter and rose by 26% in the next 12 months.
The five consecutive months of winning streak occur more frequently, but this time is special because the index hit a record high at the end of the fifth month. According to data from Sundial Capital Research, this has happened 17 times since the beginning of 1961, and the index reached the highest-17 times a year later. This does not mean that there is not a painful fall along the way. After the recent back-to-back rises in 2020 and 2018, the next two months were down 6.5% and 5.4%, respectively. But these winning streaks seem to send positive signals to long-term investors. “Momentum is a powerful force and generally does not change easily,” writes Jason Gopfeet, founder of Sundial Capital Research.
However, the market is not without risk. The June Supply Management Institute manufacturing survey declined, but did not change the argument that economic growth is still strong, but is slowing and inflation still exists. Minutes from the June FOMC meeting will be released next week, which may provide further evidence of time reduction. Then there is the most contagious variant of Covid19 Delta, whose studies have shown that it can become the leading strain in the United States in two to three weeks. 4,444 new cases have started to rise again – reaching 16,517 on July 1, an increase of 5% in two weeks – Fundstrat founder Tom Lee warned that in 10 to 15 states with low vaccination rates, this increase may become in a “parable”, leading to a brief stock sell-off. “Our main case is that Delta’s short-term panic ‘resulted in’ flatness’ in July,” Li wrote.