Last week witnessed the most outstanding performance for stocks in 2024, with all three major stock market indexes achieving their best results of the year. This surprising turn of events occurred in August, a month typically known for its lackluster performance in the stock market. Just a couple of weeks ago, on August 5, the markets experienced their worst day of the year, with the Nasdaq plummeting over 1,000 points and the S&P 500 dropping 3.4%.
However, the markets managed to recover most of their losses from that day, and this positive momentum carried through to last week, which turned out to be the best week for stocks this year. The forward momentum raises the question – will it spill over into the upcoming week?
Nasdaq emerged as the star performer, gaining an impressive 5.3% last week after experiencing a 13% dip from its closing high on July 10 to the low on August 5. The S&P 500 and the Dow Jones Industrial Average also saw significant gains, rising 3.9% and 2.9% respectively. Even the Russell 2000 managed to surge by 2.9%, although it was not its best week of the year.
Several factors contributed to this stellar performance, with the highlight being the Consumer Price Index (CPI) falling for the fourth consecutive month. The positive economic news continued with the Retail Sales report showing a 1% increase in July and the University of Michigan’s Consumer Sentiment Survey indicating a 2.1% climb in August.
Looking ahead, the markets opened higher on Monday, with a relatively light economic data calendar for the week. However, all eyes are on the Federal Reserve, as the minutes of the July FOMC meeting are set to be released on Wednesday, and Fed Chair Jerome Powell is scheduled to speak on Friday at the annual Economic Symposium. Investors are keenly watching for clues on a potential Federal Funds rate cut in September.
In addition, retail earnings will take the spotlight this week, with reports from major companies like Lowe’s, Target, Macy’s, and BJ’s Wholesale Club Holdings. Tech giants like Palo Alto Networks and Snowflake are also set to report their earnings, with Warren Buffett’s Berkshire Hathaway recently selling off its stake in Snowflake.
While last week’s performance was exceptional, there is a possibility for the momentum to continue, especially with all ears tuned in to Jackson Hole and Powell’s speech on Friday at the Economic Symposium.