The third quarter of 2021 is over. Today I am going to share a recap of how stocks performed and what to expect in the fourth quarter.
Global stocks were strong in July and August before weakness in September weighed on third-quarter gains. Here are the stats for third-quarter gains.
- NASDAQ 100 (QQQ): +1.1%
- S&P 500 (SPY): +0.6%
- Vanguard Global Stock Market (VT): -2%
- Emerging Markets (EEM): -8%
Here are the returns for the year.
- NASDAQ 100 (QQQ): +17%
- S&P 500 (SPY): +18%
- Vanguard Global Stock Market (VT): 12%
- Emerging Markets (EEM): -2%
Take a look at the chart below.
*chart from tradingview.com
Energy and financials were the two strongest sectors. Healthcare and utilizes were the two weakest sectors. Below is a full list of sector returns for the year.
*chart from csimarket.com
What is Driving Stocks Higher in 2021?
I see a few key factors driving stocks higher in 2021.
COVID recovery is in play: The COVID recovery has been slowing down a bit in the last few months, but bigger picture the economy is still in recovery mode and growing at a very respectable clip.
Trillion dollar stimulus packages: Washington has been flooding the economy and market with stimulus money to fight against COVID. In March Washington did a $1.9 trillion stimulus and today is close to another multi-trillion dollar bill.
What Should We Expect Looking Forward?
Looking forward into the final quarter I am expecting more gains for U.S. and global stocks because of three key factors.
Stocks have upward momentum: Stocks have strong upward momentum right now and the path of least resistance is still higher.
Seasonal strength for U.S. stock market: The U.S. stock market is moving into its strongest 6-month period of the year. The period from November through April are historically the strong six months of the year.
Santa Claus Rally: December is also historically a very good month for stocks.
Here is the Plan Moving Forward
I have been cautious in deploying cash for my clients in the last two months because August, September and October are typically volatile months for stocks and the stock market has been up a lot in the last year.
However, the plan moving forward is to start deploying that cash now, looking to buy low when the stock market is down. The goal is to have most of this cash deployed by the end of October – so it should be a very active couple of weeks.
I’ll be back with another update next week – have a great day!
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.
