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“Start every day off with a smile and get it over with.” – W.C. Fields
It’s a new month for investors, and while August has historically been a tough month for bulls, like most months in the last year, futures are indicating a positive start although they’re currently well off of highs from earlier in the session. Over the last 12 months, the S&P 500 has started off the first trading day of the month with a gain ten times. The only exceptions were in January when the S&P 500 kicked off the year with a drop of 1.48% and then in June when it traded down marginally (-0.05%).
The earnings flow so far this morning has been quiet (as it usually is on a Monday morning), but the pace will pick up again this afternoon and throughout the week. On the economic data front, investors will be watching PMI data at 10 AM as well as Construction Spending. In international markets, equities are higher despite mixed to weak PMI manufacturing data. As an example, China’s reading came in weaker than expected and at its lowest reading since February 2020. Despite that weakness, the headline index has been in expansion territory for well over a year now.
COVID data will continue to make headlines in the weeks ahead as the Delta variant accelerates and large cities consider new mask or social distancing mandates. This morning, though, it has been reported that NYC will stop short of requiring masks but strongly encourage their use. Given the national mood, it will take much worse conditions for more draconian measures to be implemented.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, the latest US and international COVID trends including our vaccination trackers, PMI Manufacturing data, and much more.
Stocks are looking to start out the week and month on a positive note, but they closed out July on a down note as the S&P 500 finished down fractionally for the week. Sectors that led the way lower last week were all some of the recent leaders (Consumer Discretionary Communication Services, and Technology). On the upside, investors rotated into Materials, Energy, and Financials which were the only three sectors that were below their 50-day moving averages heading into the week. You never want to see one sector consistently taking up all of the oxygen in the market, so this kind of rotation is exactly the type of action you want to see.