Stocks Closed 1% Off All-Time High; Strong New Economic Data

Published Friday, August 20, 2021 at: 7:53 PM EDT

4944 2

The Standard Poor's 500 stock index, the main growth driver of investor portfolios, closed the week less than 1% off Monday's all-time closing high, and the U.S. Index Of Leading Economic Indicators surged again in July. Meanwhile, the latest fundamentals, retail sales and housing starts data, remained very strong in July. Here's a two-minute update for investors.

4944 3

This chart shows that the LEI has rolled over very definitively prior to recession – except for the Covid-19 recession, making it a reliable indicator of what’s ahead in the economy. The LEI’s surge since the Covid recovery began indicates no recession is in the outlook.

The Conference Board, an association for large U.S. companies, has measured the U.S. Leading Economic Indicators monthly since 1996 and the index is higher than since its inception.

“The U.S. LEI registered another large gain in July, with all components contributing positively. The Leading Index’s overall upward trend, which started with the end of the pandemic-induced recession in April 2020, is consistent with strong economic growth in the second half of the year,” according to the Conference Board’s economics research team. “While the Delta variant and/or rising inflation fears could create headwinds for the US economy in the near term, we expect real GDP growth for 2021 to reach 6% year-over-year, before easing to a still robust 4% growth rate for 2022.”

The Conference Board Leading Economic Index® (LEI), is comprised of the following component indexes measuring fundamentals key to growth in the U.S: 

  1. average weekly hours worked in manufacturing sector
  2. average weekly initial unemployment claims
  3. manufacturers’ new orders of consumer goods and materials
  4. ISM index of new orders
  5. manufacturers’ new orders, nondefense capital goods
  6. building permits for new private single-family housing units
  7. stock prices as measured by the S&P 500
  8. Leading Credit Index™
  9. interest rate spread between 10-year Treasury minus fed funds
  10. index of consumer expectations

4944 4

The Census Bureau’s monthly retail sales report is comprised mostly – 88% -- of sales of goods while just 12% of retail sales comes from the service sector. Retail sales overall contribute 30% of U.S. economic growth.

In July, retail sales ticked lower and some commentators say it’s a bad sign. However, retail sales are coming off a spectacular Covid recovery surge that had propelled retail sales to heights no one had expected. The 1.1% decline in retail sales that occurred from June to July was not so important in the context of the 15.6% surge in retail sales in the 12 months ended July 2021. 

July retail sales excluding gasoline prices because of their volatility, are up +14.1% y/y  compared to June’s +17.0% y/y.

4944 5

In July, the U.S. government recorded 1.53 million housing starts, compared to 1.64 million in June. That’s down from a month ago but is still near a 15-year high. The U.S. needs about 1.7 million new single-family homes built every year and had been trailing that figure for 15 years until just before the pandemic. After plunging during the initial Covid outbreak, it has staged a comeback to its pre-Covid strength.  

4944 6

The Standard & Poor’s 500 stock index closed today at 4,441.67. The index gained +0.81% from Thursday and is down -0.59% from last week. The index is up +66% from the March 23, 2020, bear market low.


Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.

This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.

2024

    2023

    2022

    2021

    2020

    2019

    2018

    2017

    2016

    2015

    Company Info

    35 Pinelawn Rd., Suite 101E
    Melville, NY 11747
    631.454.2000

    845 Third Avenue
    Suite 1703
    New York, New York 10022
    212.371.3950

    Our Disclosure

    Wealth Advisory solutions provided by subsidiaries of Percheron Asset Management Group, Inc.: Herold Advisors Inc. and Lantern Wealth Advisors, LLC., SEC registered investment advisors. Securities offered through Herold & Lantern Investments Inc., a registered broker dealer, Member FINRA, MSRB, SIPC.

    Bernard Herold & Co., Inc.
    Rule 606(a)1 Reporting Public Disclosure

    Herold & Lantern Investments, Inc. Rule 606

     

    This website uses cookies for navigation, content delivery and other functions. By using our website you agree that we can place cookies on your device. I understand