The S&P 500 Index, which closed record after the statements made by Fed Chairman Jerome Powell, is running to a new record on a monthly basis. The NYSE index, which gained more than 6% in this month, had not had such a good August since 1986.
S&P 500, which was hit hard by the coronavirus in March, started to recover rapidly in the following months. The S&P 500 Index grew by 12.7% in April, 4.5% in May, 1.8% in June and 5.5% in July. The index rose by 6.6% this month.
Fed News Has Been Good For The Markets
Fed Chairman Jerome Powell shared some information about the central bank’s inflation policy during yesterday’s Jackson Hole conference. Stating that the Fed’s average inflation expectation is at the level of 2%, Powell explained that they may allow the inflation rate to increase from time to time in order to reach this average.
The Fed will continue to fight the coronavirus on an economic scale. Stating that the Fed revised its policies every five years and prepared special policies against the coronavirus this year, Powell emphasized that they will do whatever it takes to develop the American economy.
Powell’s statements about Fed policies and inflation expectations did not create a huge shock effect on the markets. Even if gold and Bitcoin prices fell for a while, this decline did not last long. The S&P 500, on the other hand, started to rise rapidly after this news from the Fed front and reached an all-time high during the day.
Experts Look to the Future with Hope
With the news from the Fed yesterday, the S&P 500 Index, which broke a new record, has drawn an upward graph throughout the month. The S&P 500, which has grown by almost 7% this month, has not had such a good August in 34 years.
The main reason why the S&P 500 has achieved such a good graphic in recent weeks may be the performance of technology companies. Some technology stocks, which have been on the decline due to the coronavirus, have started to rise rapidly in recent months. Registered in the S&P 500, Apple’s shares were valued by 18% this month. If Apple hadn’t appreciated that much, the S&P 500’s growth rate this month would have been 4.1%, not 6.6%.
Speaking to CNBC, Jim Paulsen said that technology stocks may have been valued more than they should have and that a new correction may occur in the market. However, Paulsen emphasizes that the foundations of the technology sector are very solid and states that a similar bubble will not occur. Paulsen is also bullish looking at the future of the market.