The S&P 500 Drifts Into New Record Highs

You would think having the S&P 500 (Index: SPX) would be more exciting. And yet, that's what happened during the trading week ending on Friday, 6 August 2021, as the index clocked new record highs on three of the five days of the week.

That result is consistent with the dividend futures-based model projections, where it appears investors are still primarily focused on the distant future quarter of 2022-Q1 in setting current day stock prices.

We can make an argument that investors might be splitting their focus between 2021-Q4 and 2022-Q1, but there is so little difference between the model's projections for these different points of time in the future as to not make the effort worthwhile at this point in time.

Meanwhile, we find the S&P 500 drifted into new record highs during a week when there wasn't much in the news to move the markets, which is to say it mostly happened because of inertia.

Monday, 2 August 2021

• Signs and portents for the U.S. economy:
  • Oil falls over 3% on concerns over demand and OPEC supply boost
  • U.S. construction spending inches higher in June
  • U.S. manufacturing growth cooling; bottlenecks starting to abate
• Bigger trouble developing in China:
  • China's July factory activity growth slips to 15-month low - Caixin PMI
  • Delta variant bears down on China just as its economy loses steam
• Bigger inflation developing all over:
  • Australia home prices keep rising even as Sydney locks down
  • Japan's factory activity growth picks up, costs rapidly rise -PMI
  • UK inflation to hit 3.9% in early 2022, NIESR forecasts
• Central banking minions being told what to do next:
  • Explainer-How the Bank of England could start to reverse its huge stimulus
  • German business group says ECB rates policy threatens euro
• S&P 500 edges down on virus woes, slowing economy

Tuesday, 3 August 2021

• Signs and portents for the U.S. economy:
  • Oil settles lower in volatile trade on worries about Delta variant
  • Solid U.S. factory orders, business spending on equipment point to enduring manufacturing strength
  • U.S. hiring may have slowed in July amid COVID surge -data
• Fed minions split on whether to keep stimulus hose gushing:
  • Fed's Daly says labor market not tight, jobs recovery underway
  • A hawkish Bullard sees more volatile economic "regime" emerging in U.S
• S&P 500 closes at record high as Apple, healthcare stocks help shrug off Delta worries

Wednesday, 4 August 2021

• Signs and portents for the U.S. economy:
  • Oil prices fall as Delta variant spread weighs
  • Mortgage rates fall below 3% for first time since February - MBA
  • U.S. services sector growth accelerates despite supply constraints
• Fed minions want to keep stimulus spigots flowing until 2023, think lifting lockdowns is good for adding 500,000 jobs per month, but also want to start tightening monetary policy:
  • Fed's Clarida backs raising interest rates in 2023
    • Bonds Hammered As Unexpectedly Hawkish Clarida Sends Yields Surging
  • U.S. labor market likely to add about 500,000 jobs a month - Fed's Bullard
• Eurozone discovers growth happens after lifting lockdowns:
  • German service sector grows at record pace after lockdown lifted
• Bigger inflation developing all over:
  • China intervenes to manage commodity prices
    • Analysis-Reality bites: China's meddling cools but can't reverse hot commodity prices
    • Factbox-China’s key commodities targeted by Beijing’s recent measures
  • Euro zone business surged in July but price pressures and COVID weigh
• Wall Street closes mixed, S&P 500 ends off record high

Thursday, 5 August 2021

• Signs and portents for the U.S. economy:
  • U.S. trade deficit jumps to record high in June on strong import growth
  • U.S. unemployment rolls shrinking in boost to labor market recovery
  • Oil rises over 1% as Mideast tensions face virus concerns
• Fed minion says stimulus punch bowl can be taken away at any time, doubts digital currency
  • Fed's Waller says accommodative policy may be pulled back sooner than expected
  • Fed's Waller says he is skeptical a central bank digital currency would improve U.S. payments
• Nasdaq, S&P 500, set records as jobless claims decline

Friday, 6 August 2021

• Signs and portents for the U.S. economy:
  • U.S. labor market powers ahead with strong job gains, lower unemployment rate
    • Analysis: U.S. jobs report bolsters case for Fed to taper asset purchases
  • Oil falls in biggest weekly decline in months on demand worries
• S&P 500, Dow close at record highs as solid jobs data boosts cyclicals

The dividend based model we use to project the future for the S&P 500 uses the CME Group’s S&P 500 quarterly dividend futures as part of its data inputs because they capture investor expectations for the future over the next five quarters!