Seasonal Slump?

Last week’s stock market slide begs the question whether this August will fit its historical pattern of seasonal weakness.

With the latest escalation of trade tensions, investors should be prepared for more market volatility this month.

Other keys for stocks this month include the Fed and earnings, although the impacts of both are likely to be drowned out by trade concerns.

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HMC Partners
More On Fed Rate Cut Implications

We would recommend tilting equity allocations slightly toward value because of the duration and magnitude of the growth rally, but we recognize growth may get a boost from the Fed.

Small cap underperformance experienced over the past year may continue as the Fed’s rate-cutting campaign gets underway.

Industrials, emerging markets, and gold may be among the beneficiaries of a more accommodative Fed, which could potentially contribute to a weaker U.S. dollar.

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HMC Partners
Riding The Wave...For Now

We are maintaining our year-end fair value S&P 500 target of 3,000 even though the index is very close to that level.

The Fed tailwind is at the market’s back, making further stock market gains a realistic possibility.

We expect the ride to second-half gains may be a bit bumpy, creating opportunities to potentially buy dips.

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HMC Partners
Q2 Earnings: Muddling Through

We expect slightly positive earnings growth in the second quarter, with substantial drag from falling technology sector earnings.

The big question for investors this quarter is how much tariff costs are reflected in analysts’ earnings estimates.

We expect better-than-expected earnings may be a catalyst for stock market gains in the second half of this year.

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HMC Partners
Taking Stock at the Halfway Mark

The S&P 500 delivered its best first-half performance since 1997, raising questions about what that strong start may mean for the second half.

Stocks’ track record after the strongest first-half rallies is mixed but points to modest gains ahead.

We would consider this bull market to have a stronger foundation if it had more sustained leadership from cyclical sectors and relied less on central bank policy.

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HMC Partners
Stock Fundamentals Still Supportive

We believe the economic and earnings environment will support the potential for additional gains for stocks over the second half of 2019.

Better than expected earnings may be a positive stock market catalyst while historical patterns forecast the possibility of more strength through year end.

We encourage investors to look beyond short-term market stresses and consider the real, fundamental drivers of investment returns.

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HMC Partners
Stocks and Fed Rate Cuts

Stocks have benefited recently from increasing hopes of a Fed rate cut, although investors probably won’t get one this week.

Stocks’ historical performance after initial Fed rate cuts has been mostly positive, but it has been greatly dependent on the business cycle.

We prefer to see the market stand on its own and take more direction from generally solid fundamentals of economic growth and corporate profits.

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HMC Partners