S&P 500 (SP500) Friday Up 2.28% for August to close at 5,648.38 points. The accompanying SPDR S&P 500 ETF Trust (New York: Spy) He was Up 2.34% For the same period.
Wall Street’s benchmark index posted its fourth straight month of gains, and is now up It has advanced in nine out of the last ten months. Moreover, the index is now just 0.38% below its all-time high of 5,669.67 points during the day.
The story of August was one of a sharp drop at the start of the month, followed by a steady recovery over the next few weeks. The July U.S. nonfarm payrolls report released on August 2nd proved to be a major market mover. With job growth lower than expected and the unemployment rate rising, concerns were raised about a slowing economy and recession.
In addition, the surprise interest rate hike by the Bank of Japan on July 31, and the subsequent unwinding of the so-called “yen carry trade,” also had a negative impact on global markets. A carry trade involves traders borrowing in a low-yielding currency and investing the proceeds in higher-yielding assets in a different currency.
The combination peaked on August 5, a day when the S&P 500 fell 3%, prompting many market participants to dub the event “Black Monday 2024.” The benchmark index hit a low of 5,119.26 that day, about 10% below its high for the day.
The rest of August was all about recovery. Economic data on inflation and retail sales helped calm fears of growth and recession. Moreover, Federal Reserve Chairman Jerome Powell said at the annual Jackson Hole symposium that it was time to “adjust policy,” a statement widely interpreted as the central bank’s approval of the start of a monetary easing cycle.
“August came in like a lion and ended like a lamb, with the S&P 500 falling hard early in the month thanks to the unwinding of the yen carry trade. But concerns quickly subsided as strong economic data, including a strong July retail sales report and moderate inflation trends, confirmed decent strength in the economy,” said Mike Zaccardi, a Seeking Alpha contributor.
“A rate cut now appears imminent after Fed Chair Powell’s upbeat speech in Jackson Hole last Friday,” Zaccardi added. “However, investors should be cautious, as the last four months of September have seen sharply negative returns for the S&P 500.”
It now seems that it is only a matter of time before the Wall Street benchmark index regains its record levels.
Moving to the monthly performance of the S&P 500 sectors, nine of the 11 sectors ended higher. Consumer Staples, Real Estate and Healthcare were the top gainers, each rising 5% or more. Energy and Consumer Discretionary were the losers. Here’s a breakdown of the sector performance and their associated SPDR Select Sector ETFs from the close of July 31 to the close of Aug. 30:
#1: Consumer Staples +5.78%and the Consumer Staples Select Sector SPDR Fund (XLP) +5.99%.
#2: Real Estate +5.64%and the SPDR Real Estate Select Sector Fund (XLRE) +5.73%.
#3: Health Care +4.99%and the Healthcare Select Sector SPDR Fund (XLV) +5.06%.
#4: Finance +4.36%and the Select Financial Sector SPDR Fund (XLF) +4.57%.
#5: Facilities +4.29%and the Utilities Select Sector SPDR Fund (XLU) +4.81%.
#6: Industries +2.67%and the Select Industrials SPDR Fund (XLI) +2.82%.
#7: Materials +2.22%and Materials Select Sector SPDR Fund (XLB) +2.32%.
#8: Communication Services +1.23%and the Select Communications Sector SPDR Fund (XLC) +1.78%.
#9: Information Technology +1.16%and the Technology Select Sector SPDR Fund (XLK) +0.70%.
#10: Discretionary Consumer Goods -1.08%and the Consumer Discretionary Select Sector SPDR Fund (XLY) -0.20%.
#11: Energy -2.32%and the Select Energy Sector SPDR Fund (XLE) -2.07%.
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