KEY HIGHLIGHTS
- The S&P 500® was up 2.90% in August, bringing its YTD return to 20.41%.
- The Dow Jones Industrial Average® gained 1.22% for the month and was up 15.53% YTD.
- The S&P MidCap 400® was up 1.83% for the month, bringing its YTD return to 19.36%.
- The S&P SmallCap 600® gained 1.90% in August and had a YTD return of 22.15%.
MARKET SNAPSHOT
"I hope my meaning won't be lost or misconstrued, but I'll repeat myself," as I update the weeks, but it is now the 13th week in a row that the S&P 500 has posted a new closing high (starting the week of June 7, 2021; 27 in that time period), and it has posted 53 new closing highs YTD (tied for fourth, so far, since 1926; the record is 1995 with 77). For the month, the index posted 12 new closing highs in its 22 trading days, so the odd day was when it didn't post a new high; the index was up 2.90% for August. If that doesn't take your "breadth" away, consider that 442 of the S&P 500 issues have gained YTD (average 26.29%), with 248 of them up at least 20% (38.66% average). If you can't gasp that, from the 2019 (pre-COVID-19) close, 394 were up (average 57.51%), and 354 (average 35.96%) if you exclude the 50 that have at least doubled. To be fair to the song, and more importantly the market, "There must be 50 ways to" play this market, including "just slip out the back, Jack, make a new plan, Stan, you don't need to be coy, Roy," just take your profits given we are up 20.41% YTD (after 2020's 16.26% and 2019's 28.88%). And I might as well repeat myself on this one too, "This Market Is Nuts" (from the NYT front page), but if you’re not in it, you're nuts—and most likely out of a job.
The U.S. Senate stayed in session to pass a bipartisan USD 1 trillion (69-30) infrastructure bill, passing it on to the House, as it also passed a USD 3.5 trillion framework bill along party lines (50-49), permitting them to start the debate. The Taliban completed taking control of Afghanistan as the U.S. was leaving, taking the capital city of Kabul and occupying executive offices, as President Ghani left the country. Biden went on national TV and defended the departure, affirming the Aug. 31, 2021, total pullout date. Reports showed people trying to leave the country, as most exits were controlled and limited. On Aug. 26, 2021, two bombs attributed to suicide bombers went off at the Kabul airport, killing 13 U.S. troops (first U.S. serviceperson killed since February 2020, when an agreement for the pullout was reached) and at least 170 Afghans, as the attack was attributed to an ISIS affiliate (which is fighting with the Taliban). The U.S. completed its departure on Aug. 31, 2021, and the market did not react to the situation.
Concern grew that due to the COVID-19 variant, herd immunity may not be reached after 70% of the population is fully vaccinated and may need to be increased; discussed target rates were over 80%. The fight over requiring grade school students to be masked grew, as political beliefs appeared to overpower the issue (or wellness of children). The U.S. Food and Drug Administration (FDA) authorized COVID-19 boosters (a third shot) to medically vulnerable people. The CDC recommended that individuals get booster shots eight months after they received their first shot of either Moderna (MRNA) or Pfizer (PFE). Biden encouraged (starting the week of Sept. 20, 2021) a third booster shot for those fully vaccinated (with Moderna or Pfizer; Johnson & Johnson (JNJ) was still being reviewed), starting eight months after the second shot, utilizing a priority rollout (expected to include healthcare workers, those at risk, the elderly, etc.). Similar to the rollout of the first vaccine shots, this is expected to vary by state (since there is no federal mandate). Later in the month, the FDA officially approved Pfizer's COVID-19 vaccine, changing its emergency use approval to permanent use, and some companies and municipalities moved to require their workers to get the vaccine. Johnson & Johnson said a booster shot (to their one-shot vaccine) resulted in a strong immune response of antibody levels.
The EU recommended that its member states (27) halt all nonessential travel to the U.S. for non-vaccinated individuals, citing the high COVID-19 variant spread; it had added the U.S. to the safe list in June 2021. U.S. COVID-19 vaccinations have surged to an average 898,000 per day from 620,000 at month-end July (900,000 in June and 1.7 million in May), as the Delta variant continued to spread, reaching 280,000 cases per day, up from 67,000 at the end of July. The increase also resulted in many companies delaying their return-to-work schedule and putting back-to-school schedules in jeopardy. Florida remained the epicenter for the Delta variant, as the state continued to set infection records. The vaccine rate in the U.S. (for having at least one shot) reached 70% for adults, as the general eligible population was at 61.7%, with 52.4% being fully vaccinated. Several states (including Louisiana) and areas (including San Francisco) reinstated mask requirements, as California became the first state to require all teachers and staff to be vaccinated or tested in order to return to work, followed by New York City requiring proof of vaccination to enter events, gyms, and restaurants. The U.S. will require all military personnel to be vaccinated by Sept. 15, 2021.
Many companies (Home Depot, McDonalds, Target, Tyson Foods) reinstated their mask requirements, with some companies delaying their return to office (BlackRock, Citigroup, and Wells Fargo, with Amazon delaying into 2022) or requiring vaccinations (Microsoft, United Airlines for U.S.-based employees). On Broad and Wall, the New York Stock Exchange said all people on the trading floor will need to be vaccinated by Sept. 13, 2021.
