Stocks Broke Record High Again This Week
Published Friday, August 13, 2021 at: 7:51 PM EDT
The manufacturing purchasing managers index ticked lower in July but is not far off from a record high, while the more important service purchasing management index shot higher to a record high. Meanwhile, business owner optimism ticked lower in July and the S&P 500 closed the week by breaking another all-time closing high. Here’s a roundup of the financial economic news.
The Manufacturing Purchasing Managers Index came off its peak in July but was still at a very strong number by historic comparison. According to The Institute for Supply Management (ISM), which conducts this survey of purchasing management professionals at large companies monthly, a reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting. Nothing like a recession is indicated in the current reading.
The ISM also conducts a monthly survey of purchasing managers at service sector companies. Since the service sector accounts for 89% of economic activity in the U.S., this index is much more important to the financial economic outlook. The service economy survey shot higher in July, hitting its highest level since the index’ inception in January 2008, an impressive number
The Optimism Index, a monthly survey of business owners, decreased by 2.8 points in July to 99.7, reversing nearly the entire 2.9-point gain in June’s report, according to the National Association of Independent Business.
Six of the 10 index components of the business owner optimism index declined in July, while three improved, and one was unchanged. Sales expectations for the next three months decreased 11 points and business owners expecting better conditions over the next six months decreased 8 points.
Notably, 49% of business owners reported job openings that could not be filled, an increase of 3 points from June and a 48-year record high.
The Standard & Poor’s 500 stock index closed Friday at an all time high of 4,468.00 for the second week in a row. According to The Wall Street Journal, Friday marked the 48th time in 2021 that the index broke its record high. The S&P 500 gained +0.16% from Thursday and +0.70% from last week. Since the March 23, 2020, bear market low, the S&P 500 index is up +66.53%.
Inflation uncertainty and the spread of the Covid variant remain the two known major risks and could cause a sharp stock price decline, but a recession is not a threat.
A parting tip: Consider whether the next sharp drop in stock prices would present a strategic tax-selling opportunity to convert traditional IRA or 401(k) assets invested in stocks into tax-free Roth IRAs. With tax rates low but expected to be going up, converting to a Roth IRA in 2021 is something for retirement savers to evaluate in the current environment.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
- Ending Inflation Will Take Months
- Economists Predict Lackluster 4Q22 Growth; Fed Algorithm Predicts 4.3%
- Amid Darkening News, Positive Economic Signs
- Stocks Soared This Past Week But Economic Pain Is Still Ahead
- Factors Blurring The Likelihood Of A Recession
- Weekly Investor Update
- Stocks Rose 4.7% This Past Week, Amid A Bear Market
- 105 Years Ago In Investing: Conditions Were Much The Same As Today
- A Timely Reminder Of Why You Take Stock Risk
- Good And Bad Financial News: Weekly Investment Update
- A Financial And Tax Planning Strategy For This Week's Stock Market Plunge
- Having Trouble Tuning Out The Bad Financial Economic News?
- A Key Signal Of Strength At A Pivotal Moment In Economic History
- Despite Strong Jobs Report, Stocks Declined Last Week
- The Fed Risks A Recession To End Inflation, As Expected
- Stocks Snap Four-Week Win Streak
- Stocks Have Soared Lately, But What Should You Expect Near And Long-Term?
- Investing In An Economy Beset By Multiple Anomalies
- Despite Bad Economic News, Stocks Rose 4% In The Week Ended July 29, 2022
- Amid Bad Data Releases, Leading Economists Predict No Recession
- Good News: Real Retail Sales Dropped Fractionally In The Past Year
- Financial Economic News Analysis
- The Good News Is All This Bad News
- Four Signs A Recession Could Be Short And Shallow