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S&P & Nasdaq ETFs Rise for Five Months in a Row: What Lies Ahead?
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In July, the S&P 500 has experienced a 3% increase, marking its fifth successive positive month, a streak not seen since the seven-month period ending in August 2021. Additionally, the tech-heavy Nasdaq Composite has achieved a 3.8% gain so far this month, putting it on course for its fifth consecutive winning month as well.
Similarly, the blue-chip Dow has risen by 3.1% in July. Impressively, the Dow recorded a 13-day advance last month, matching the index's longest streak of gains. Year-to-date, the Nasdaq has surged by over 37%, while the S&P 500 has seen a 19.5% increase, and the Dow has risen by 7.3%.
Top Stories of July
The key developments included a 25-bps Fed rate hike, the release of better-than-expected U.S. GDP growth data for Q2, along with several other upbeat data points, and a good start to a Q2 earnings season with banking giants showing strength and falling inflation.
During the second quarter, a significant shift in deposit trends was noticed in the American banking system, with regional banks gaining ground over their larger counterparts as the pint-sized banks offered higher yields to boost deposits.
After shying away from China, sentiment for investing in that country improved in July. Net foreign buying in mainland Chinese equities marked their best month since April, official data showed. There is a reason behind the development too. China cut the key interest rate in 10 months in June, which boosted the markets in July.
China ETFs, in fact, bounced back sharply last week as global hedge funds scooped up Chinese equities following the latest politburo meeting. The meeting clearly indicated support for capital markets and signaled the introduction of bigger easing measures to shore up the economy.
Meanwhile, the BoJ's recent policy will now allow 10-year Japanese government bond (JGB) yields to fluctuate around the 0% target level within a range of approximately plus and minus 0.5 percentage points.
However, the Japanese central bank decided to increase its tolerance level by 50 basis points, offering to purchase 10-year JGBs at 1% through fixed-rate operations. This move signifies greater flexibility in managing the yield curve (read: BoJ to Adopt a More Flexible Stance, Lose YCC: ETFs in Focus).
What Lies Ahead?
Wall Street veteran Morgan Stanley’s Michael Wilson recently said that US equities are rallying like it's 2019 – a year for the S&P 500 (up 29%)’s best performances, as quoted on Yahoo. "The data we have today suggests to us that we are in a policy-driven, late-cycle rally," Wilson, a Wall Street bear, wrote in a note, the YAhoo artcle noted. A similar rally took place in 2019 when the central bank paused hikes and then slashed rates.
The Fed raised rates at its policy meeting last week. The central bank can enact one more rate hike this year, per many market watchers. Meanwhile, inflation is cooling, though likely to remain sticky. If inflation exhibits further downtrend, a solid Wall Steet rally will be in the cards. Furthermore, corporate earnings have been showing resilience despite higher rates.
ETFs in Focus
Broder market ETFs like SPDR S&P 500 ETF (SPY - Free Report) , Invesco QQQ (QQQ - Free Report) , iShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) and iShares Russell 2000 ETF (IWM - Free Report) could now be tapped.
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S&P & Nasdaq ETFs Rise for Five Months in a Row: What Lies Ahead?
In July, the S&P 500 has experienced a 3% increase, marking its fifth successive positive month, a streak not seen since the seven-month period ending in August 2021. Additionally, the tech-heavy Nasdaq Composite has achieved a 3.8% gain so far this month, putting it on course for its fifth consecutive winning month as well.
Similarly, the blue-chip Dow has risen by 3.1% in July. Impressively, the Dow recorded a 13-day advance last month, matching the index's longest streak of gains. Year-to-date, the Nasdaq has surged by over 37%, while the S&P 500 has seen a 19.5% increase, and the Dow has risen by 7.3%.
Top Stories of July
The key developments included a 25-bps Fed rate hike, the release of better-than-expected U.S. GDP growth data for Q2, along with several other upbeat data points, and a good start to a Q2 earnings season with banking giants showing strength and falling inflation.
During the second quarter, a significant shift in deposit trends was noticed in the American banking system, with regional banks gaining ground over their larger counterparts as the pint-sized banks offered higher yields to boost deposits.
After shying away from China, sentiment for investing in that country improved in July. Net foreign buying in mainland Chinese equities marked their best month since April, official data showed. There is a reason behind the development too. China cut the key interest rate in 10 months in June, which boosted the markets in July.
China ETFs, in fact, bounced back sharply last week as global hedge funds scooped up Chinese equities following the latest politburo meeting. The meeting clearly indicated support for capital markets and signaled the introduction of bigger easing measures to shore up the economy.
Meanwhile, the BoJ's recent policy will now allow 10-year Japanese government bond (JGB) yields to fluctuate around the 0% target level within a range of approximately plus and minus 0.5 percentage points.
However, the Japanese central bank decided to increase its tolerance level by 50 basis points, offering to purchase 10-year JGBs at 1% through fixed-rate operations. This move signifies greater flexibility in managing the yield curve (read: BoJ to Adopt a More Flexible Stance, Lose YCC: ETFs in Focus).
What Lies Ahead?
Wall Street veteran Morgan Stanley’s Michael Wilson recently said that US equities are rallying like it's 2019 – a year for the S&P 500 (up 29%)’s best performances, as quoted on Yahoo. "The data we have today suggests to us that we are in a policy-driven, late-cycle rally," Wilson, a Wall Street bear, wrote in a note, the YAhoo artcle noted. A similar rally took place in 2019 when the central bank paused hikes and then slashed rates.
The Fed raised rates at its policy meeting last week. The central bank can enact one more rate hike this year, per many market watchers. Meanwhile, inflation is cooling, though likely to remain sticky. If inflation exhibits further downtrend, a solid Wall Steet rally will be in the cards. Furthermore, corporate earnings have been showing resilience despite higher rates.
ETFs in Focus
Broder market ETFs like SPDR S&P 500 ETF (SPY - Free Report) , Invesco QQQ (QQQ - Free Report) , iShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) and iShares Russell 2000 ETF (IWM - Free Report) could now be tapped.