The “summer rally” fizzled out in August as most equities drifted lower. The Dow Jones Industrial Average ended August down 3.7%, the S&P 500 fell 4.1%, and the NASDAQ was off 4.5%. Remarks made in late August by Federal Reserve Chair Jerome Powell suggested the central bank will continue hiking interest rates to combat inflation and stabilize prices. Year-to-date, the Dow is off 12.0%, the S&P 500 is 16.1% lower, and the NASDAQ is back in bear market territory, down 24.1%.
Only two sectors were positive in August. Energy was up 2.7% even as crude oil and retail gas prices fell, while Utilities inched 0.5% higher. Cyclical sectors were hurt the most. Communication services, consumer discretionary, real estate, and technology all fell between 3.5% and 6.2%.
New and existing home sales both declined, and for the sixth time in the last seven months. The latest data from July shows US New Single-Family Home Sales fell 12.7%, while Existing Home Sales fell almost 6%.
On the inflation front, July’s inflation rate fell to 8.52%. Finally, the average US gas price hasn’t started with a “$3” since February 28th—that changed in August, as gas prices clocked in at $3.94 by month’s end.
The 1-Year T-Bill sported the second-highest rate among US Treasuries as of August 31st. Only the 20-Year Bond’s 3.53% yield was higher than the 1-Year’s 3.50%. Seven of the nine US treasury instruments closed out August with rates above 3%.