Market Recap – August 2014
Investors regained an appetite for risk in August, seeming to focus on generally encouraging Q2 economic data and corporate earnings reports rather than tensions overseas. The optimism took the S&P over 2,000 for the first time and gave the index its 32nd record close of 2014. Both the Dow industrials and the small caps of the Russell 2000 regained positive territory for the year, while the Nasdaq widened its year-to-date lead. And despite global conflicts, the Global Dow rebounded from its losses of the previous month.
Despite some volatility during the month, gold ended August at $1,285 an ounce, not far below where it began. The price of oil slid roughly $2 a barrel to end just under $96 a barrel. And the benchmark 10-year Treasury yield fell to a level it hasn't seen in more than a year as demand pushed prices up.
- The U.S. economy grew slightly faster during the second quarter than previously thought. The Bureau of Economic Analysis said the 4.2% initial estimate of gross domestic product was revised upward from 4% primarily because of an increase in the value of commercial construction and business investment in equipment. Meanwhile, corporate after-tax profits rebounded from Q1's -16.3% decline, rising 8.3% during Q2.
- The unemployment rate remained at its lowest level in almost six years (6.2% in July), which is more than a full percentage point below a year earlier. The Bureau of Labor Statistics also said the 209,000 new jobs added to payrolls in July roughly equaled the average monthly job gains over the last year.
- Despite the improved job market, the Federal Reserve still had plenty of leeway to maintain the measured pace at which it's been winding down bond purchases. Assuming the process continues at its current pace, new bond purchases are expected to come to a halt in October. And at the Federal Reserve's annual Jackson Hole symposium, Chair Janet Yellen cited continued slack in the labor market as one reason not to accelerate any interest rate increases.
The Month Ahead
Investors will watch to see if equities can sustain gains after light trading volumes rise to more typical levels once traders return to their desks from vacation. As the anticipated end of QE3 draws nearer, traders will focus on the Fed's September 17 announcement; any guidance on the timing of future interest rate hikes could move markets.
Notes: The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. Market indexes listed are unmanaged and are not available for direct investment.
Portions of this market recap were provided by Forefield Financial Communications.
The performance quoted represents past performance, which does not guarantee future results.This summary represents the views of the portfolio manager as of August 31, 2014. Those views may change, and the Funds disclaim any obligation to advise investors of such changes. The Azzad Funds are self-distributed and available by prospectus only. A free copy of the prospectus, which contains information about the Funds’ risks, fees, and objectives, and other important information, is available at www.azzadfunds.com or by calling 888.350.3369. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks measuring the performance of those Russell mid-cap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth index. The Dow Jones Sukuk Index is designed to track the performance of global Islamic fixed-income securities, also known as Sukuk. The index includes U.S. dollar-denominated, investment-grade Sukuk that have been screened for Shari’ah compliance.