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The S&P 500 had its best month since November 2020

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Yahoo Finance Live anchors discuss July marking the best performing month for the S&P 500 since November 2020.

Video Transcript

JULIE HYMAN: And then, finally, thing three this morning is sort of where we are right now. The context for all of this we've been talking about. July turned out to be the best month on Wall Street for the S&P 500. And since November 2020, it was a rally that was filled by better than expected corporate earnings. And, of course, all this happening despite the Fed's aggressive rate hike because, as we've talked about before, a lot of investors are now looking out to next year and seeing a potential rate cut at some point that the Fed's going to be forced to sort of flip around.

So, yes, the S&P 500 saw a 9.1% gain in the month. That's after it had its worst start to a year since 1962, though. So it was definitely a bounce back. And, again, to talk about the consensus, most of the investors we've spoken to and strategists we've spoken to have said, we're probably not done, right? That that was a bear market rally. It's not as though-- you know, like, we talked to Laurie Cousino of RBC on Friday, who said it's possible that the June low was the low, but it's also possible, even probable, that it wasn't. So, you know, we're going to have to kind of wait and see here.

If you look at what performed best in the month, interestingly enough, it was consumer discretionary at a time when we were seeing Target cut again, Walmart cut its forecast. So really interesting there to see that group outperform. Information technology up. Energy still holding up well. So all of the groups in the S&P were higher on the month.

BRAD SMITH: But it also comes back to this broader theme that we've seen over the course of July, which is just relief. Relief that the Fed didn't do 100 basis points and only did 75. Relief that earnings came in lighter-- or lighter to the downside, I should say, than anticipated. And so for all of the companies that have had to come out, whether it be in the consumer discretionary kind of breadth that we had seen Target talking about earlier on in the quarter, that we had seen Walmart have to issue some of their own updated guidance around, there is so much relief that had taken place over the course of July that it actually caused some of that relief rally to take place in this interim period of time in the midst of a bear market right now.

BRIAN SOZZI: Yeah, and this is something I think-- you know, just tying this all together what I wrote about in the "Morning Brief" newsletter this morning. It just it feels like a terrible time to be investor-- be an investor. And by that, I mean it's hard to predict some of these quarters coming into the reports.

Look at Intel you could have read the past 10 earnings reports from this company, drilled down in the last 10 earnings transcripts, and not got a sense they were going to miss by that much and warn by that much. Then you look at P&G. Who would have thought they would have come out and said, over the next 12 months, we might see a $3 and 1/2 billion after tax hit because of inflation.

And there's just a lot coming at investors. And we had that chart there on July performance. We've seen a lot of gains. Not really, I think, capturing what we have heard from the likes of Intel and a company like P&G.

JULIE HYMAN: So I would quibble with one thing in your morning newsletter. I would sub out the word investors for traders. It might be a tough time for traders, but I think if you're a long-term investor, you know, and you're buying into an-- well, first of all, I don't think Intel is entirely out of nowhere, right?

BRIAN SOZZI: Just the magnitude.

JULIE HYMAN: The magnitude, yes. But if you are an investor in these companies and you're looking beyond 12 months from now, it's not necessarily a terrible time, right? If you're trying to choose these companies on the long-term fundamentals. But in the shorter term, in the trader time horizon, time period, then, yes, it's a really--

BRIAN SOZZI: I'm changing the headline right now. I'll be right back.

JULIE HYMAN: Yeah.

[LAUGHTER]

BRIAN SOZZI: I am, actually. If I'm changing--

JULIE HYMAN: If I was your editor.