Is The Summer Market Rally Over?
James Picerno | Sep 06, 2022 03:35AM ET
The summer’s over and it looks like the summer rally is history, too.
US trading resumes today after a long Labor Day weekend, with the backdrop of risk-off sentiment dominating recent activity in the major asset classes. Indeed, red ink splashed across markets near and far in August, based on a set of ETFs.
Other than cash (SHV), August racked up a perfect run of losses, ranging from modest – a 0.5% monthly decline for emerging markets stocks (VWO) – to a steep 8.2% drop for foreign corporate bonds (PICB).
US stocks (VTI) posted a relatively middling loss, shedding 3.7% last month. US bonds (BND) fared a bit better with a 2.8% setback.
For the year through August, only commodities (GSG) are reporting a gain, and a hefty one at that: 30%. Otherwise, all the major asset classes (except cash) are underwater for 2022.
The summer rebound for the Global Market Index (GMI) also reversed course as August losses piled up. By the end of last month, this unmanaged benchmark (maintained by CapitalSpectator.com), which holds all the major asset classes (except cash) in market-value weights, tumbled 4.1%. Year to date, GMI is down 17.1%.
Comparing GMI’s performance to US stocks (VTI) and bonds (BND) over the past year reminds that the broad trend for risk assets continues to skew negative and so the summer rally now appears to be a brief interruption in an ongoing correction.
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