The S&P Composite 1500 Index surged 7.7% in July, accompanied by price gains for all component sizes, styles, and sectors, led by growth groups, while underperformers consisted of the defensive sectors, observes Sam Stovall, chief investment strategist at CFRA Research, in the firm's flagship newsletter, The Outlook.

In addition, 92% of the 1500’s 148 sub-industries were higher. Despite another 75 basis point hike in the Fed funds rate and the second quarter of GDP decline, which unofficially signals recession, investors were heartened by Q2 earnings reports that were less dire than originally anticipated as well as a more dovish tone set by Fed chair Powell following the recent FOMC meeting.

The question now is whether this rally is for real, or just another bear-market head fake. CFRA thinks thinks that economic softness will continue to fuel speculation of a slowdown in the Fed’s rate-tightening pace.

However, Lowry Research, a CFRA technical analysis business, recently warned: “No doubt, the investing environment has improved, and several core indicators have gained significant ground. However, two-fisted buying is not yet justified. Heading into a seasonally weak August, any enthusiasm in our outlook remains restrained.”

Speaking of August, the S&P 500 recorded its third lowest average monthly return since 1945 and fourth lowest frequency of advance. Oddly, the S&P 500 recorded not only its fourth-best one-month advance, but also produced the second worst one-month decline.

Finally, the 500 saw the third highest level of volatity in August. Therefore, it should come as no surprise that all sizes and styles in the S&P 500 declined on average since 1995, with only three sectors recording gains. Finally, only 51% of the sub-industries in the 1500 that have been around for at least 19 years rose on the month.

Representative companies from this list of S&P 1500 sub-industries with the highest average price gains in August are: Garmin LTD (GRMN), Electronic Arts (EA), Amazon (AMZN), American Water Works Co. (AWK), Sysco Corp. (SYY), Salesforce Inc. (CRM), Newmont Corp. (NEM), and Pool Corp. (POOL).

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