Monthly Market Update:
Recap of July 2019
In July, the market saw record highs. The beginning of the month was very positive for the US markets, and we closed out the month with the S&P 500 up 1.44%, the Dow Jones Industrial Average up 1.12% and the Nasdaq composite up 2.15%. International markets lagged the US in July.
Three things that have become key talking points every month have been rates, jobs and tariffs. This month was not any different. On the 31st of July, the Federal Reserve Chairman announced a rate cut of 1 quarter of a percent. The market was hoping for a larger cut and didn’t respond very well. Opening up August, new tariffs against China were discussed, causing a negative reaction with the markets. Then today, the jobs report came out, with 164,000 jobs created in July. This was more than the 151,000 expected jobs, though the previous two months were revised and less jobs had been created than was originally mentioned. The unemployment rate remains at 3.7%. With all of this news, the market continues to respond in a negative manner, though we must remember these fluctuations are normal.
These topics are out of our control and the news will continue share market commentary that affects emotions. The truth is that the fed must see a slow down on the horizon if they are lowering the rate and by lowering the rate, their goal is to keep the economy and inflation stable. The crystal ball is not working and the economy and market could continue growing for an unknown period of time before we see a decline. Your portfolio should reflect your risk tolerance and the needs of your financial plan.
In July, our portfolios were re-balanced. With market growth, stocks grow faster than fixed income, causing portfolios to not align with your correct risk tolerance. A re-balance brings everything back to the where it should be.
A portfolio with more stocks generally grows at a higher rate long term, but the short term is a much rougher ride.
As always if you have any questions, please do not hesitate to reach out.