Six Straight Months of S&P 500 Gains

Monthly Market Snapshot: July 2021


Investors experienced building crosswinds in July, but continued to drive equity indices higher. One of those crosswinds was the Covid Delta variant, which causes some investors to question whether or not the ongoing recovery might start to weaken. We don’t see it as derailing the economic recovery, though it could delay recovery in some regions / sectors. Despite these fears, the S&P 500 added 2.3%. The clear underperformer during the month was emerging markets (down 7.0%) as Chinese stocks plunged amid a regulatory crackdown.

A bi-partisan agreement on a “hard” U.S. infrastructure bill appears to have been reached. However, the larger, social-spending infrastructure component may need to be passed via a party-line reconciliation bill this fall. A key question that remains is if it be largely deficit-financed or paid for by higher corporate and individual taxes. Fed policy remains in question as well with investors eagerly awaiting an official announcement about the tapering of Fed asset purchases.

Citi’s Global Investment Committee (GIC) left its allocation to equities and fixed income unchanged. However, the GIC made several changes within the portfolio’s composition, including upgrading large-cap U.S. and China stocks at the expense of other emerging markets and real estate. The GIC recommends holding 10% of medium-risk portfolios in stocks with consistent dividend growth.