KEY HIGHLIGHTS
- The S&P 500® was up 2.27% in July, bringing its YTD return to 17.02%.
- The Dow Jones Industrial Average® gained 1.25% for the month and was up 14.14% YTD.
- The S&P MidCap 400® was up 0.28% for the month, bringing its YTD return to 17.21%.
- The S&P SmallCap 600® lost 2.44% in July and had a YTD return of 19.87%.
MARKET SNAPSHOT
It was a good July for investors. The S&P 500 continued up, which has become the norm, setting new highs along the way. The U.S. reopening was front and center (along with the sounds of clinging registers and swiping cards at merchants), even as the COVID-19 Delta variant spread dramatically (especially among the unvaccinated). Globally, however, things were not as good, as the recovery appeared to be on hold (or moving at a slower pace) due to the fourth wave, as countries (including the U.S.) tried to convince people to get the vaccine (markets were one sided YTD, as the S&P United States BMI was up 16.48%, compared with the S&P Global Ex-U.S. BMI’s 6.62%). France and Italy restricted entry to certain establishments without a vaccine, while the U.K. declared a “Freedom Day” by eliminating restrictions, even as COVID-19 continued to spread in that country, and the Prime Minister was forced to isolate due to exposure. In the U.S., the CDC updated its recommendations to advise everyone (regardless of vaccination status) to wear masks inside where there may be a risk, with Biden requiring federal employees to wear them, while Los Angeles and New York City are requiring them in schools (starting in September).
For the S&P 500, however, it has been a good year, with some thinking of closing out and going on vacation for the rest of the year—but why do that when so many people (domestic and foreign) are pouring money in (strong inflows) to support stocks? The award-winning supporting role for the second quarter in a row was played by earnings in the second half of the month, as they easily beat estimates (both on earnings and sales, with an 88% beat rate), while margins remained high (Q2 looks like it will be at 13.1%, which would be a record) and guidance improved (with some footnotes about the Delta variant and supplies), and companies appeared to be able to pass along higher costs to the ever-spending consumer. For July, the index posted 7 new closing highs (8 in June; 41 YTD); it has posted new closing highs in every month since November 2020 (it missed October but had new closing highs in August and September 2020). The index closed the month up 2.27% (after June’s 2.22% gain) and up 17.02% YTD (after 2020’s 16.26% gain).
The U.S. proposal for a global minimum tax won the support of 130 countries, as part of an international taxing code change. The proposal must now be detailed and worked out, with expected difficulties with individual nations attempting to protect their own concerns.
Democrats on the Senate Budget Committee agreed on a USD 3.5 trillion human and infrastructure bill (USD 4 trillion sought by Biden, and USD 6 trillion by progressives in his party), which could pass without Republican support.
In a separate bill, the U.S. Senate voted 67-32 to start working (and voting) on a USD 1 trillion infrastructure deal, which would actually add USD 548 billion more to the existing allocations. Given the vote and political makeup, the bill is expected to eventually be approved.
