August was a banner month for the bulls. On August 25, the Standard & Poor’s 500 halted its earlier reversal to hit the 2,000 benchmark for the first time ever. The impact of this feat is perhaps more psychological than anything else, but it does underscore the S&P’s primary upward trajectory. Even bearish analysts were hard pressed to deny that the bigger picture – despite some dips – looks firmly bullish. Landmark achievements like this cause the experts to look at the past and see where we started. The numbers are solid. Since March 2009, the S&P has almost tripled in value, and let’s not forget that the index is up 8 percent for this year.

What is driving the current upswing? Simply stated, factors include:

• Better than anticipated earnings for the second quarter;
• Positive economic data, including a decline in joblessness to 6.2 percent;
• Consumer optimism has rebounded, showing steady increases over the past three months;
• Excitement over upcoming possible corporate deals, especially whispers that Burger King is contemplating buying Tim Horton’s, a major Canadian doughnut company;
• And indications from central bankers in Europe and Japan that more market stimulus is in the pipeline.

All of the above helped the investment community to see past geopolitical concerns – especially Ukraine – that might have hurt the market’s upward trajectory.

Companies that contributed in a significant way to the overall climb in the stock index included the following (which all saw annualized increases of more than 17 percent in their respective stock prices): Apple, Adobe Systems, AutoZone, Allergan and the Ball Corporation. Apple distinguished itself amongst these winners with an increase of almost 37 percent.

Despite these gains, some analysts point out that current stock prices are very expensive in historical terms, and that the upward swing won’t last forever.

The Fed

Federal Reserve Chairwoman Janet Yellen assuaged some fears when she noted that the Fed’s policies were not about to change because of “slack in the economy and labor market.”

Prior to the stock market highs, investment experts were hanging on every word delivered by Yellen during the international annual symposium at Jackson Hole. Yellen is fully attuned to concerns that an end to the quantative easing program would be followed by interest rate increases. The Fed stopped tying its rates to the unemployment rates back in March 2014, but offered assurances that rates would remain near zero for some time after the bond buying (quantative easing) program ended.

Assessing a wide range of variables and contradictory data analyses from Fed and private sector economists, Chairwoman Yellen said the Fed’s job was not yet over. Key factors include the fact that wage growth is almost stagnant; joblessness is down to 6.2 percent, some 7.2 million workers hold part-time positions but want full-time jobs, and 3.8 percent of American workers have been unemployed for six months or longer. Wall Street was reassured by Yellen’s stance.

All in all, August was a good month for investment gurus and individual investors alike.

The above are general observations only and should not be regarded as a substitute for the advice of tax and investment professionals.