NEW YORK, Aug 28 — A rally in which US stocks have doubled from post-pandemic lows is about to enter the year’s worst month for equities, as investors focus on a nationwide Covid-19 resurgence and how quickly the Federal Reserve plans to pull back on its easy money policies.
That type of performance has signaled comparatively strong returns in the past. The index has gone on to deliver a median gain of 5.2 per cent for the rest of the year during years when it made 30 or more new highs through August, according to data from LPL Financial. That compares with a median gain of 3.6 per cent for all years, the firm’s data showed.
With worries over the Delta variant looming, “to continue to question the rally because of seasonality makes sense,” said JJ Kinahan, chief market strategist at TD Ameritrade. Net leverage among hedge funds, meanwhile, stood at 50 per cent at the start of the third quarter compared with 58 per cent late last year, according to a Goldman Sachs report.
“When I sift through the noise ... that’s what the market is focusing on right now, plain and simple,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.