Equities extended their rally in August, with the S&P 500 hitting multiple record closes. Market’s tone was generally calm, and investor optimism was fueled by solid earnings and expectations for Fed rate cuts.
Market breadth improved as small caps and economically sensitive sectors outperformed big tech.
Corporate earnings remained strong, with over 80% of S&P 500 companies beating Q2 estimates and earnings growth reaching 10.4%
Seasonal caution: Looking ahead, September and October have historically been the most volatile months for equities.
Treasury Yields were rangebound: the 10- year began the month at 4.21% and ended at 4.23% contending with the opposing forces of some tariff-driven inflation vs. a weakening labor market.
Jerome Powell’s remarks at Jackson Hole were seen as more dovish than expected. The market is now pricing in a roughly 85% chance of a 25bps rate cut at the September FOMC meeting.
Equity Markets
August brought a sense of calm to financial markets even as the underlying economic and market data remained mixed. Equity indexes notched fresh highs, volatility gauges like the VIX drifted toward yearly lows, and Treasury yields eased, providing support to valuations. At the same time, economic signals were uneven— corporate earnings generally surprised to the upside, but employment and consumer data suggested some moderation in growth, and trade policy uncertainty lingered. This divergence between softening fundamentals and resilient market performance underscored investor confidence in an eventual Fed rate cut, while also highlighting the risk that markets may be pricing in more stability than the broader economy can sustain. Additionally, September and October have historically been the most volatile months for equities.
Investors should be prepared for heightened market swings and the potential for short-term pullbacks as seasonal pressures combine with macroeconomic uncertainty. We saw an extension of the U.S. equity rally last month, with the S&P 500 hitting multiple record closes, buoyed by strong earnings, dovish Fed signals, and broadening participation beyond mega-caps. Investor optimism was fueled by expectations of interest rate cuts, while the dominance of AI-related mega-caps continued to pose concentration and volatility risks.
We did see a notable shift, though, in market dynamics: economically sensitive sectors—materials, consumer discretionary, financials, and small-caps— outperformed big tech, with the Russell 2000 surging over 7.3%, its best month since November.
Markets Rally. Data Mixed.
Markets Rally. Data Mixed.
Performance Review & Outlook
Highlights
Equities extended their rally in August, with the S&P 500 hitting multiple record closes. Market’s tone was generally calm, and investor optimism was fueled by solid earnings and expectations for Fed rate cuts.
Market breadth improved as small caps and economically sensitive sectors outperformed big tech.
Corporate earnings remained strong, with over 80% of S&P 500 companies beating Q2 estimates and earnings growth reaching 10.4%
Seasonal caution: Looking ahead, September and October have historically been the most volatile months for equities.
Treasury Yields were rangebound: the 10- year began the month at 4.21% and ended at 4.23% contending with the opposing forces of some tariff-driven inflation vs. a weakening labor market.
Jerome Powell’s remarks at Jackson Hole were seen as more dovish than expected. The market is now pricing in a roughly 85% chance of a 25bps rate cut at the September FOMC meeting.
Equity Markets
August brought a sense of calm to financial markets even as the underlying economic and market data remained mixed. Equity indexes notched fresh highs, volatility gauges like the VIX drifted toward yearly lows, and Treasury yields eased, providing support to valuations. At the same time, economic signals were uneven— corporate earnings generally surprised to the upside, but employment and consumer data suggested some moderation in growth, and trade policy uncertainty lingered. This divergence between softening fundamentals and resilient market performance underscored investor confidence in an eventual Fed rate cut, while also highlighting the risk that markets may be pricing in more stability than the broader economy can sustain. Additionally, September and October have historically been the most volatile months for equities.
Investors should be prepared for heightened market swings and the potential for short-term pullbacks as seasonal pressures combine with macroeconomic uncertainty. We saw an extension of the U.S. equity rally last month, with the S&P 500 hitting multiple record closes, buoyed by strong earnings, dovish Fed signals, and broadening participation beyond mega-caps. Investor optimism was fueled by expectations of interest rate cuts, while the dominance of AI-related mega-caps continued to pose concentration and volatility risks.
We did see a notable shift, though, in market dynamics: economically sensitive sectors—materials, consumer discretionary, financials, and small-caps— outperformed big tech, with the Russell 2000 surging over 7.3%, its best month since November.
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Aspirations are what help make goals reality.