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August 2024 - Market Summary Thumbnail

August 2024 - Market Summary

Investment

Quick Take:

  • Equities Claw Back Losses
  • Falling Treasury Yields Booster Bond Returns
  • Softness in the Labor Market

Equities

The equity pullback continued into the first week of August, but most indices regained a substantial amount of their losses by month’s end.   International stocks measured by the MSCI EAFE index was the best performer of the major indices.  The S&P 500 rose 2.4% in August, the Dow Jones Industrial Average advanced 2%, and the Nasdaq Composite added 0.7%. The one laggard was the small-cap Russell 2000 index which, after surging 10.2% in July, retreated 1.5% in August.

On a percent-off-high basis, the S&P 500 ended August just 0.3% away from a new all-time high, while the Dow Jones has fully regained its losses. The Nasdaq Composite remains 5% below its all-time high, but has come a long way from as much as a 13.1% drawdown earlier this month.

Just two of the eleven sectors finished August in the red: Consumer Discretionary, which fell 0.2%, and Energy, which gave up 2.1%. The rotation into Value stocks gained momentum as Consumer Staples, Real Estate, and Health Care all posted gains of over 5% in August. Utilities and Financials were not far behind, advancing 4.8% and 4.6% in the month, respectively.



Fixed Income

Treasuries repeated their activity patterns from July: yields (rates) declined across the board leading to further gains for bond investors. Longer duration bonds, the most sensitive to interest rate movements, were the best performers on the month the Bloomberg US Long Gov/Credit index was up 2.08% in August.  As you can see below bond funds across the maturity spectrum positive and high-yield bonds also posted a gain of 1.63% despite signs of cooling in the economy.  

 

Economy

The labor market showed signs of cooling as the July nonfarm payrolls figure of 114,000 fell short of expectations and the unemployment rate rose for the fourth straight month to 4.3%, triggering the “Sahm Rule”.  Gold broke through $2,500 per ounce for the first time, even as the inflation rate fell further below 3%. Home sales–both new and existing–rebounded on a month-over-month basis, while mortgage rates fell following hints of a Fed Funds Rate cut taking place at the next FOMC meeting.