Positive news continued to buoy the markets during the second half of July. On Tuesday, July 19th, all major markets posted significant gains: the Dow Jones Industrial Average (Dow) closed up 754 points, the S&P 500 gained 104 and the NASDAQ Composite Index (NASDAQ) grew by 344. Investors are growing optimistic that the markets have found their bottom after a brutal first half of the year. Corporate earnings are also coming in stronger than expected as businesses grapple with inflation and supply chain issues. Kim Forrest, founder and chief investment officer at Bokeh Capital Partners summed it up1, “Both investors and companies were expecting hot inflation … what was a surprise was that they were able to manage through it well.”
A Bank of America survey of professional investors, also released on July 19th, suggests that markets are set up for a relief rally as investors’ panic may have teed up a fantastic buying opportunity.
Markets jumped again on Wednesday, July 27th, as the Federal Reserve (Fed) concluded its 2-day meeting and took action to raise interest rates by 0.75%. This increase was in line with expectations, and comments from Fed Chairman Jerome Powell indicated that the Fed may slow the pace of its rate hikes in the future. “As that stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.” Powell also indicated he does not believe the economy is currently in a recession.2
It’s nice to report some positive returns for the second newsletter in a row! Wrapping up the latter half of July, all major markets posted significant gains. As of July 31st, the Dow grew by 1,557 points (4.96%), the S&P 500 increased 267 points (6.91%) and the NASDAQ jumped 938 points (8.19%).
1 www.cnbc.com, “Dow rallies more than 750 points as traders bet that the bottom is in”, July 18, 2022
2 www.cnbc.com, “Dow rallies 400 points as Powell hints Fed could slow pace of rate hikes, Nasdaq jumps 4%