401(k)s get July jolt, but August brings angst
Main Street investors with stocks in their retirement portfolios are about to see a nice bump in their balances: The Dow closed at 21,891.12 on Monday, making July the best month since February.
But investors need to stay alert in August, which is a tough month for U.S. stocks, history shows. In the past 20 years, for example, the Dow Jones industrial average has tumbled an average 1.4% during August, the worst performance of all 12 months, according to Bespoke Investment Group.
In July, the Dow rose nearly 550 points, or 2.6%, finishing at record highs in four consecutive sessions and topping its average returns for the month over the past 20, 50 and 100 years, Bespoke data show. It was the best month since February.
Powering the Dow higher were shares of Boeing. The maker of commercial airplanes and defense aircraft took flight and jumped 22.7% for the month, including a 14.2% rally since reporting second-quarter earnings July 26 — which beat Wall Street estimates — and hiking its full-year sales forecast.
Stocks overall have gotten a lift from strong earnings across Corporate America. Also helping: rebounds in U.S. job growth and second-quarter economic expansion after a sluggish start to the year. Companies in the Standard & Poor’s 500 stock index collectively are on track for profit growth of 10.8%, putting the index on pace for its first back-to- back quarters of 10%-plus earnings growth in six years.
Asked what the main driver of stocks were in July, Quincy Krosby, chief market strategist at Prudential Financial, said: “Earnings, earnings, earnings.”
The other major U.S. stock indexes also recorded gains. The S&P 500 rallied nearly 2%. The tech-packed Nasdaq gained 3.4%, pushing its market-leading gain for 2017 to nearly 18%.
Stocks are at risk in August of being upended by volatile trading on days when most Wall Street pros are on vacation, as well as worsening geopolitical threats and events from places such as North Korea and Russia, says Joe Quinlan, a market strategist at U.S. Trust.