2021:Six down & Six to go

2021: Six down & Six to go

Hello everyone, and welcome to the July edition of the boodle blog. We are happy to have you here, and it is our pleasure to share with you our opinion on what is going on in the stock market and how you can benefit from this knowledge.
June 30th marked the halfway point in the stock market and the year, so let’s take a look back, and also look ahead to the next six months.
The year started off with a lot of uncertainty, and a new political administration coming into office. Many people who we speak with were overly cautious on the Biden administration assuming the Presidential duties at the White House, but we were less concerned about a Democrat administration as we were about the Covid-19 virus and the new treatments that had been announced by the medical community.
We cautioned our clients to “stay the course” and continue with the portfolio strategy and not be swayed by headlines of death & destruction. The DOW started the year at 30223.89, the S&P 500 at 3700.65, and the NASDAQ at 12698.45. As of June 30th, the DOW was at 34502.51, the S&P 500 was at 4297.50, and the NASDAQ closed at 14503.95.
These gains were significant, and double-digit in all 3 indexes with the S&P 500 leading with a 16.7% advance. Why did the stock market perform so well despite a seeming endless amount of bad news? We believe several factors were in play, and we will address some of the major ones for you in this blog. The big problem in 2020 was the coronavirus and the shutting down of the U.S. economy. The nation went into a recession, jobs were lost, and the stock market went into a tailspin. However, once President Trump announced a plan to speed up the vaccine distribution, we knew that this would bode will for the country and our investors.
Another part of the recovery had to do with the Federal Reserve and Congress. Trillions of dollars were added to the economy and one benefit was the $1400 stimulus checks that many Americans received. This really helped to stabilize the economy. There were other factors as well, not the least of which was the opening of businesses and people getting back to work.
Looking ahead to the second half of 2021 we remain somewhat positive that gains will continue although maybe not as robust as the first half of the year. July marks the start of the third quarter (Q3), and this means we will get Q2 earnings from corporations shortly. We expect companies to report good numbers because 2020 Q2 numbers were so weak, that 2021 numbers by comparison should look good.
We will continue to monitor the Federal Reserve for any hint in rate increases, and we expect to see an increase in GDP forecast.
Unemployment continues to get better as more Americans head back into the work force. Always be prepared for pullbacks, as they are a part of all bull markets, which we believe will continue for the foreseeable future. Thank you for choosing boodle, and we hope to see you back here next month.