๐๐ฏ๐ก August's Market Mosaic: Winners, Losers, and Surprising Twists!๐ก๐ฏ๐
Kia ora Tiger traders!
August was a whirlwind for the S&P 500, with a market performance as colorful as a stock trader's dream chart! While tech titans either soared or stumbled, some unexpected pairings emerged as the monthโs power couples. Letโs break down the heatmap highlights and find out who led, who lagged, and where the surprises lurked!
๐ข Tech vs. Communication Services: A Tale of Two Sectors ๐ข
๐ Google's Red Day:
GOOG (Google) saw its share price drop by -4.26%, thanks to the ongoing antitrust investigation that's got them feeling like they're on the Monopoly board's 'Go to Jail' square. Meanwhile, over in the tech corner, AAPL (Apple) +4.87% and NVDA (Nvidia) +9.30% were busy proving that not all tech giants are created equal. Goldman Sachs analysts are loving Appleโs ecosystem, while Nvidiaโs AI dominance is making others green with envy~or maybe thatโs just the chart! ๐
๐ AMZN in the Red Zone:
In Communication Services, AMZN (Amazon) -3.03% was left wondering if Prime Day could save them from this dip. The contrast between the strong performance in tech and the struggles of communication services suggests that regulatory headwinds and market sentiment might be taking a toll on the likes of Google and Amazon. Will September be a turnaround? JP Morgan analysts seem to think Amazon might just bounce back if regulatory pressure eases.
๐ Birds of a Feather? Costco & Nvidia Walk Hand in Hand!
๐ Costco (COST) +9.24% & ๐ป Nvidia (NVDA) +9.30%:
Who would have thought that a bulk retailer and a semiconductor leader could be BFFs? Both Costco and Nvidia delivered stellar performances in August, much to the delight of traders looking for reliable gains. Nvidiaโs AI-powered rise is no surprise, but Costcoโs steady march upwards shows that when it comes to market dominance, these two might as well be the dynamic duo. Wedbush Securities even quipped that "Costco is the Nvidia of retail," proving that even the markets have a sense of humor! ๐
๐ Healthcareโs Healthy Gains: Eli Lilly Leads the Pack ๐
๐ LLY (Eli Lilly) +15.33%:
Healthcare stocks were a bright spot in August, with Eli Lilly leading the charge. The sectorโs overall green hue suggests that investors are betting big on healthcare, possibly as a safe haven in uncertain times. JNJ (Johnson & Johnson) +3.17% and MRK (Merck) +4.07% werenโt far behind, contributing to a sector thatโs looking as healthy as ever.
๐ Financials & Industrials: Steady as She Goes
๐ผ Financial Sector Stability:
While the market was volatile, the financial sector showed remarkable resilience. BRK-B (Berkshire Hathaway) +10.21% and JPM (JPMorgan) +1.90% posted solid gains, signaling investor confidence in the sector. GE (General Electric) +2.87% in Industrials also stood out, proving that even in turbulent times, some companies just keep on ticking.
โก Energy & Utilities: Slow and Steady Wins the Race
๐ Energy Sector Stability:
The energy sector, led by XOM (Exxon Mobil) +0.85%, might not have made the biggest waves, but its steady performance shows that sometimes, slow and steady really does win the race. On the Utilities front, we saw a mixed bag, reflecting regional differences and specific company challenges. The sectorโs performance was like a box of chocolatesโyou never know what youโre gonna get!
๐ August and September: The Market's Worst Nightmare?
As we approach September, it's important to note that August and September have historically been the worst months for the stock market. Since 1945, the S&P 500 has averaged losses of 0.2% in August and 0.7% in September. In fact, September is notorious as the absolute worst, with an average decline of 1.2% dating back to 1928.
However, 2024 might bring some hope as it's a presidential election year. Incumbents typically want to keep 401(k)s looking good to maintain voter confidence, and history shows that election years, particularly the fourth year of a presidential term, often bring stronger stock performances. Analysts note that when stocks drop in the second year of a presidency, they have historically rebounded in the fourth year, adding to the optimism for the latter part of 2024. Despite the usual volatility expected in September, this election year might indeed see more market-friendly conditions, driven by efforts to maintain economic stability and investor confidence.
Hey Tiger Traders, a thought for you...Given that we're heading into September, historically the worst month for stocks, are you planning to stay the course with your current investments, or will you take a more defensive stance? Drop your thoughts below!
๐ค@TigerGPTwhatโs your take on this, considering the historical performance of August and September, should traders brace for a rough month ahead, or could this presidential election year buck the trend?
Happy trading ahead. Cheers, BC ๐
@Tiger_comments @TigerWire @TigerPicks @Daily_Discussion @TigerStars
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Based on the news articles I found, here are some viewpoints regarding the market performance in August and the outlook for September, particularly in relation to the presidential election year:
A report suggests that the stock market, represented by the S&P 500 index, is consolidating after its strong upward move in August. The index has been trading in a range, but a breakout is expected soon, potentially generating sustainable momentum. Resistance can be found at all-time highs, while support lies around 5,370. A close below 5,370 would be negative, while a two-day close above 5,670 would be extremely positive. Read more
Truist's sector recommendations for investors remain focused on the long-term, with a view beyond September. While September is historically a scary month for stocks, some experts believe that stocks will surge through year-end due to factors such as impressive earnings in growth-focused sectors like communication services and technology, as well as the artificial intelligence boom. Read more
In addition, there was an article discussing the potential impact of the presidential election year on market volatility. It suggests that election years, particularly the fourth year of a presidential term, historically bring stronger stock performances. Efforts to maintain economic stability and investor confidence during these years could create more market-friendly conditions. Read more
It's important to note that these viewpoints provide some insights into the market conditions but do not guarantee future performance. As always, it's advisable for individual traders to carefully assess their investment strategies, goals, and risk tolerance before making any decisions.
If you would like more information, I can provide the latest stock quote and analysis for Costco (COST). Let me know if you're interested!
Thanks @TigerGPT, it was interesting to read this article you provided:
When Costco Wholesale Corp. announced a membership-fee increase for its shoppers late Wednesday, investors who had been eager for such a move cheered the news. Yet on Thursday, the stock fell.
Some analysts, however, said such a reverse tends to happen after Costco's fee hikes, as investors take profits after months or years of anticipation.
"The last three times [Costco] announced a fee increase, the stock reaction the next day averaged a down-2.4% move, trading down on each of the last three fee increases," D.A. Davidson analyst Michael Baker said in a research note on Wednesday. "We believe the stock underperforms on a 'sell-the-news' dynamic."
In fact, shares of Costco lost 4.3% on Thursday. The stock is still up 28.3% so far this year, and has run steadily higher since the pandemic on solid sales growth, investments in e-commerce and, to some degree, anticipation of the fee hike announced on Wednesday.
Stifel analysts have also noted that Costco's stock has generally outpaced the S&P 500 SPX ahead of prior membership-fee hikes. But afterward, they said, shares have tended to trail the index, as markets reconcile higher expectations for the bottom-line benefits that might come from charging members more.
Costco on Wednesday said that starting on Sept. 1, it would raise its annual fee to $65 for its individual Gold Star and business members in the U.S. and Canada. Premium "executive" memberships in the U.S. and Canada will rise to $130 on that date.
The decision to raise fees will affect some 52 million members and marks Costco's first membership-fee increase since 2017. Historically, Costco has raised those fees every five years or so.
Wall Street analysts were still optimistic about the fee increase despite Thursday's selloff and broader concerns about shoppers' struggles with inflation over the past two years. They said the extra fees would help Costco's profits and allow it to bring in more products at lower prices.
Some also suggested that the question over whether its share price had peaked, after a four-year march higher, was the wrong one to ask.
"Now, the question is with this catalyst behind the stock, will this mark a near-term peak?" UBS analyst Michael Lasser said in a note on Thursday. "We think that view misses that this is how [Costco's] model works. It uses its fees to invest in and subsidize the high-quality merchandise it sells.
"Thus, having this incremental profit roll in will provide fuel to power its model," Lasser continued. "Besides, we think the timing and the magnitude of the increase was largely anticipated by the market."
Costco executives had described a fee hike as a matter of when, not if, as they weighed the state of the U.S. economy and its consumers after inflation raised fears of a downturn.
Jefferies analysts on Thursday noted that it is Costco's eighth increase in 40 years, and arrives at a time when "inflation has essentially been zero for the company for three quarters now." New U.S. government data on Thursday showed that prices overall fell for first time since 2020.
D.A. Davidson's Baker said the higher fees would add around $377 million in total revenues over 24 months. Costco made around $1.1 billion in membership fees in its fiscal third quarter.
Other analysts said Costco's bump in membership fees could push similar fees higher at rivals. William Blair analysts said that Costco's announcement on Wednesday "will likely precede a similar announcement" from BJ's Wholesale Club.
Great article, would you like to share it?