Stock Market’s Summer Fling Wasn't the Real Thing

Summer was supposed to be a period of relative inactivity in markets, and it seemed as though A-Team traders were free to go about their vacation plans without fear of missing out on significant developments.

  • If inflation was close to peaking, it would take months before we knew for sure.
  • Parts of the US economy might have been flagging, but employment was holding strong and there was ample room for consumers to keep spending.
  • Oh, and there was a whopping eight weeks of downtime between Federal Reserve meetings.

Of course, the dog days of summer turned out to be much more eventful than many expected. The S&P 500 Index rallied 17% from its June low; meme stocks and Bitcoin began to sizzle once again; and even downtrodden homebuilders caught an updraft. Some chalked it up to the illusion of a change in Fed messaging at Chair Jerome Powell’s July 27 press conference. Others credited the resilience of earnings. And some saw indications of a classic short squeeze.