August 2023 Market Summary
Stocks took a breather in August as the S&P 500 fell 1.6%, the Dow Jones Industrial Average slipped 2.0%, and the NASDAQ ended 2.1% lower. It was a disappointing month globally – EAFE sank 3.8% in August and Emerging Markets fell 6.1%. Nonetheless, August didn’t subtract too much from the upbeat year-to-date performance of major US indices. The NASDAQ is still up 34.1% in 2023, the S&P 500 is 17.4% higher, and the Dow 4.8%.
Energy was the only US stock sector that posted a positive return in August, up 1.6%. Out of the remaining ten sectors, utilities were down the most at 6.1%.
Unemployment rose by three-tenths in August to 3.8%, even as the labor force participation rate grew. Inflation crept back up above 3%, while Core Inflation fell to 4.65%. The Median Sales Price of Existing Homes leveled off this month, and mortgage rates reached 20-year highs. Gas prices rose in August even as the price of Brent and WTI crude oil traveled in opposite directions this month.
The last action taken by the Federal Reserve was raising the benchmark Target Federal Funds Rate by 25 basis points to 5.50% at its July 26th meeting. This was the 11th rate hike in the Fed’s last twelve meetings.
MoM US New Single-Family Home Sales increased 4.4% in July, following June where new home sales contracted. However, US Existing Home Sales sank for the 16th month out of the last 18, down 2.2% in July. The mixed housing data resulted in the Median Sales Price of Existing Homes leveling off, falling 0.8% to $406,700. Mortgage rate increases were negligible in July; 15-Year and 30-Year Mortgage Rates closed out the month at 6.55% and 7.18%, respectively. The 30-year mortgage rate has not been this high since early 2001.
US Treasury yields were largely flat in August, echoing the muted performance from equities. The 3-Month Treasury Bill remains the highest-yielding US treasury instrument at 5.56%, and the 10-Year is the lowest at 4.09%.