The month of August really bucked the historical trend for the stock market.
Not only did the month turn out to be quite a positive one for stocks when it is typically the worst month of the year to be invested, but records were shattered in the process. Capital flows into U.S. equities seemed unquenchable, and heavyweight favorite tech stocks charged to new all-time highs. Shares of Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), NVIDIA (Nasdaq: NVDA), Cisco Systems (Nasdaq: CSCO), Microsoft (Nasdaq: MSFT), Salesforce.com (NYSE: CRM), Visa (NYSE: V) and Mastercard (NYSE: MA) all saw record highs along with several other top tech standouts, making for a sizzling summer of big gains for the IT sector.
Euphoria is running high for the U.S. stock market, which is now considered the only game in town relative to global investing. All the right elements needed to keep the rally in an uninterrupted run are falling into place, and that has caught many fund managers underinvested and aggressively upping their equity weightings so as to at least keep pace with the major averages.
One additional element fueling the ongoing rally is that many elements of the U.S. economy are positive. Third-quarter gross domestic product (GDP) is set to challenge 5.0%, core inflation is holding at the Fed’s 2.0% target, the yield on the 10-year Treasury is camped out below 3.0% and the dollar has pulled back on the narrative that further Fed tightening will cease in 2019, quite possibly after the Sept. 26 Federal Open Market Committee (FOMC) meeting.