Wall Street and European stocks booked solid gains Thursday, with Asian markets following closely in their footsteps Friday. With the advance, U.S. stocks avoided monthly losses, while global equities notched their tenth consecutive monthly gain.
August Market Wrap
Before this week, the S&P 500 Index was on track for a monthly decline. But then a string of upbeat data bolstered confidence in the U.S. economy. The large-cap S&P 500 Index rose 0.6% on Thursday, closing at 2,471.65. That was the highest settlement in three weeks. The benchmark posted the narrowest of gains in August, edging up 0.1%.
The Dow Jones Industrial Average rose 0.3% on Thursday for a settlement of 21,948.10. For the month, it was down 0.1%.
Meanwhile, the Nasdaq Composite Index climbed 1% to close at 6,428.66 on Thursday. It was up 1% for the month.
Globally, the FTSE All World Index has gained in four of the last five sessions, pulling the benchmark into positive territory for August. The August rally was the index’s tenth consecutive monthly advance.
Stronger Economic Signal from China
Chinese factory data came in better than expected this week, with a recent survey of small- and mid-sized manufacturers showing faster growth. The Caixin China manufacturing purchasing managers’ index (PMI) recorded 51.6 in August, up from 51.1 and confounding expectations of a slight drop.
On Thursday, the official manufacturing survey of large and state-run companies showed a PMI of 51.7.
The Chinese economy is coming off a solid first half, with GDP expanding at a faster than expected 6.9%. Policymakers are trying to engineer a consumer-driven recovery, but continue to rely on debt and traditional smokestack industries to fuel the expansion.
China’s expansion is part of a synchronized global recovery that extends to Japan, Eurozone and other advanced industrialized states.
September: A Difficult Month for Equities
The month of September is notoriously difficult for equities, especially Wall Street. Various studies have confirmed that September is the worst month for the benchmark indices.
Since 1950, the Dow Jones Industrial Average has declined by an average of 1.1% during the month, according to the Stock Trader’s Almanac. The S&P 500 has averaged a 0.7% drop over the 30-day period.
The downtrend has been confirmed by Bespoke, an independent research firm. The firm reported last year that September is the only month in which the Dow has been lower on average over the past 20, 50 and 100 years.
Market volumes are set to rise next week, as investors return from the Labor Day holiday. In North America, Labor Day marks the unofficial end to summer. It occurs on the first Monday of the month.
Monetary policy will be front and center in coming weeks. The Federal Reserve, European Central Bank, Bank of Japan and Bank of England are all scheduled to hold policy meetings.