The S&P 500 (SP500) concluded the month of August with a 1.77% decrease, closing at 4,507.54 points. The SPDR S&P 500 Trust ETF (NYSEARCA:SPY) also retreated by 1.63% during the same period.
August proved to be the second negative month of the year for the benchmark index, following February. The month started with market downturns, but recouped some of the losses in the final two weeks.
Several factors contributed to the downturn in August. The downgrade of the United States’ long-term credit rating by Fitch, a conservative forecast from Apple, and an increase in debt sales from the U.S. Treasury negatively impacted equity sentiment.
The second week of August saw a continuation of market pullbacks, as technology stocks declined and inflation reports conveyed mixed signals. While the consumer price index remained unchanged, the producer price index showed an increase from the previous month, leading to speculation about the Federal Reserve’s next move.
Markets faced additional pressure in the second week of August due to a sell-off in bonds, both in the U.S. and globally. Furthermore, Treasury auctions garnered significant attention, as they tested the market’s ability to handle increased supply.
The third week of August proved to be especially challenging, with the S&P 500 declining over 2%. The sell-off in bonds persisted, alongside a deteriorating economic outlook in China, additional warnings from ratings agency Fitch, mixed retail sales data, and a mixed performance from retail giants Walmart, Target, and Home Depot.
The fourth week marked a turning point, as Fed chief Jerome Powell’s speech at the Jackson Hole Symposium provided reassurance about future monetary policy actions. Technology stocks also rebounded thanks to strong performance by chip giant Nvidia.
The final week of August resulted in market gains due to weak economic data on the labor market, a downward revision to U.S. Q2 GDP growth, and stability in a key inflation gauge preferred by the Fed. These factors increased expectations that the central bank would refrain from raising interest rates.
Looking at the monthly performance of the S&P 500 sectors, all sectors, with the exception of Energy, ended the month in the red. Utilities experienced the largest loss, exceeding 6%, while Technology recorded a decline of approximately 1.5%. Please refer to the breakdown below for the sector performances:
#1: Energy gained 1.27%, and the Energy Select Sector SPDR ETF (XLE) increased by 1.65%.
#2: Communication Services declined by 0.40%, and the Communication Services Select Sector SPDR Fund (XLC) decreased by 1.54%.
#3: Health Care dropped by 0.80%, and the Health Care Select Sector SPDR ETF (XLV) fell by 0.70%.
#4: Consumer Discretionary declined by 1.30%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) retreated by 1.74%.
#5: Information Technology fell by 1.45%, and the Technology Select Sector SPDR ETF (XLK) decreased by 1.51%.
#6: Industrials dropped by 2.26%, and the Industrial Select Sector SPDR ETF (XLI) fell by 1.98%.
#7: Financials declined by 2.86%, and the Financial Select Sector SPDR ETF (XLF) retreated by 2.69%.
#8: Real Estate recorded a decrease of 3.04%, and the Real Estate Select Sector SPDR ETF (XLRE) fell by 3.06%.
#9: Materials declined by 3.46%, and the Materials Select Sector SPDR ETF (XLB) retreated by 3.30%.
#10: Consumer Staples dropped by 3.82%, and the Consumer Staples Select Sector SPDR ETF (XLP) decreased by 3.95%.
#11: Utilities experienced the largest decline, falling by 6.72%, while the Utilities Select Sector SPDR ETF (XLU) dropped by 6.13%.
For a visual representation of the performance of the sectors, refer to the chart below: