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Market Insights

Market Update – August 28, 2021

Stocks overcame more news of turmoil in Afghanistan and higher delta variant infection numbers to finish higher this week. The S&P 500 Index and the NASDAQ Composite Index both achieved record highs. In fact, for the S&P 500 Index, it marked the 50th record high hit in 2021. The S&P has also gone 200 trading days since experiencing a 5% pullback – a lengthy span of relatively shallow volatility.


For the week, the S&P 500 Index finished up 1.5%, while the Dow Jones Industrial Average rose 1.0%. Year to date, the S&P is up 20.1%; the Dow has gained 15.8%. Labor market statistics continued to oscillate week-to-week, as first-time unemployment claims rose slightly to 353,000, while continuing claims declined marginally to 2.86 million. New home sales recovered from three months of decline to rise 1% in July, as the median price of a freshly built home reached a new record high of $390,500. Household income for Americans – from wages, investments, and government relief – increased 1.1% in July; this, coupled with a smaller rate of growth in consumer spending, served to further strengthen savings and financial positioning.


The most anticipated economic news of the week came from comments given by Federal Reserve Chairman Jerome Powell during the (virtual) Jackson Hole Symposium on Friday. Powell indicated that the Fed would likely begin tapering their bond purchases this year, while also attempting to delink this reduction to any future commitment of short-term interest rate increases. He stressed the progress already made on the economy and unemployment, while underscoring that the Fed remains keenly aware of possible pitfalls. While it is often challenging to precisely decipher the meaning of statements from Fed leaders, stocks generally responded positively to Powell’s comments as economists considered them to be relatively “dovish” on monetary policy.


Even as stocks continue to rise, potential roadblocks for future returns remain. The conflict in Afghanistan, U.S. relations with China, and the risks from ongoing delta variant caseload spikes are just a few of the many key considerations. However, this is nothing new. There have always been (and always will be) potential hurdles for investors to consider. Foundational strategies like those we employ at Planning Alternatives – asset allocation, global diversification, cost sensitivity, and developing a coherent financial plan – help to mitigate the inherent risks of investing.


As always, please contact us with any questions. We are here for you every step of the way.

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