This is a new installment in an ongoing series where Marc Bautis, Wealth Manager and Founder of Bautis Financial, comments on hot topics in the financial industry.
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%.
Consumer Prices Rise Unexpectedly in August, Stocks Fall Sharply