Another volatile market month has ended close to where it began. The large and small company stock market indicators closed July mixed but mostly negative except for technology and health care sectors. Technology has been in a growth bubble since the tech crash of 2000-2002. The Dow Jones Index is still negative YTD while the S&P grew 2.2%. Small company stocks are now measured by the Russell 2000 Index which has returned 2.5% YTD but was –1.4% in July.
The Fed Reserve Chairwoman, Janet Yellen, has assured us that they will announce an interest rate increase this year. Whether in September or December, the .25% increase has been anticipated for a year and is already priced into stock and bond market values. No surprises means that the markets will not react strongly on the final announcement.
What may have more lasting impact on the stock market is the situation in China, where the government struggles to manage a triple bubble – in investments, credit, and real estate. Such a large economy has an impact worldwide but should not overly impact the U.S. market unless the Chinese government really loses control. However the China situation plays out it may be enough to give our markets a modest correction, reducing U.S. overpriced stocks and offering an opportunity to buy in at better prices.
Diminishing evenings begin a sense of urgency to make the most of the remaining summer. Heirloom tomatoes finally begin to ripen and reward the patient. The ocean continues to warm in the northeast and too hot pools cool down more overnight. In many ways August holds the best of summer.