Investors Bet on Relief

By Alex Eule | Monday, August 10

Still Hoping. After a seventh straight day of gains the S&P 500 finished today less than 1% from its all-time high and at its highest level since Feb. 20. The broad-based index is up 3.5% during its winning streak, suggesting that investors haven’t given up on Congress passing a fifth coronavirus relief package.

Lawmakers failed to reach a deal in time for the White House’s Friday deadline, leading President Trump to sign multiple executive orders over the weekend. Today, no one was sure whether the president had the authority to extend enhanced unemployment benefits or to suspend payroll tax deductions. It didn’t seem to matter, Randy Forsyth notes on Barrons.com.

In fact, thus far in August stocks have brushed off their typical seasonal doldrums. “Historically, August is a difficult month for stocks,”  David Joy, chief market strategist at Ameriprise, wrote on Monday. Here are the stats from Joy:

Over the past 15 years the average return for U.S. stocks during the month was -0.4%. August also happens to be the most volatile month historically. But so far this year neither of those two things is occurring. The S&P 500 index is higher by 2.5% after the first full week, and the VIX index of implied volatility has fallen below its 200-day moving average to its lowest level since Feb. 21.

The day's trading was the reverse of the typical Covid-19 pattern, with the Nasdaq Composite losing ground, as the Dow Jones Industrial Average led. The Dow finished up 1.3%, while the tech-heavy Nasdaq was off 0.4%. The Nasdaq is still up 22% on the year, while the Dow is off 2.6%. 
In a sign that nerves remain somewhat frayed, though, gold continued its ascent. The safe-haven asset rose 0.7%, to $2,024 an ounce, and is up 33% on the year. 

DJIA: +1.30% to 27,791.44
S&P 500: +0.27% to 3,360.47
Nasdaq: -0.39% to 10,968.36

The Hot Stock: MGM Resorts +13.8%
The Biggest Loser: Tyler Technologies -5.8%

Best Sector: Energy +3.1%
Worst Sector: Health Care -0.3%