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Aurdan Market Perspectives – August 2024

September 4, 2024
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August was a volatile period for stocks as the S&P 500 plunged 6.1% in the first three trading days of the month. A weak employment report in the beginning of the month caused the market to fear a recession could be taking shape, prompting the selloff. However, subsequent jobs reports, easing inflation data, and strong corporate earnings alleviated the markets fears. From the bottom on August 5th, the S&P 500 rallied 8.9%, ending the month 2.4% higher. International stocks also enjoyed positive returns this month with the MSCI ACWI ex USA Index rising 2.8%. Fixed income benefited as well in August as declining rates pushed bond prices higher. The Bloomberg US Aggregate Bond Index rose 1.4% while the Bloomberg Municipal Bond Index gained 0.7%. The growth scare in the early part of August was largely caused by a weaker-than-anticipated nonfarm payrolls report. The report showed the US added 114,000 jobs in July, a shift down from the recent pace of roughly 200,000 job adds per month. Coupled with this was rising participation in the labor force, which pushed the unemployment rate up to 4.3%. This marked the highest level since October 2021.

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Later in the month, initial jobless claims data came in better than feared, easing concerns that unemployment would rise further. The Consumer Price Index also came in as expected, with inflation rising 0.2% for the month and 2.9% over the past year. The benign inflation print raised expectations that the Federal Reserve will cut interest rates at their September meeting. Finally, corporate earnings showed strong growth in the second quarter, with profits rising 11% year-over-year. This marked the strongest growth in earnings since Q4 2021.

Despite the swift market drawdown in early August, valuations popped right back to elevated levels by the end of the month. While the economic backdrop appears to be strong for now, we will continue to evaluate incoming data for signs of weakness. We maintain that a diversified and balanced approach allows investors to play both offense and defense in this uncertain environment. If you have any questions or concerns on the markets or your portfolio, please reach out to a member of our team.

IMPORTANT DISCLOSURES

The views, opinions and content presented are for informational purposes only. The charts and/or graphs contained herein are for educational purposes only and should not be used to predict security prices or market levels. The information presented in this piece is the opinion of Aurdan Capital Management and does not reflect the view of any other person or entity.  The information provided is believed to be from reliable sources, but we cannot guarantee the accuracy or completeness of the information, no liability is accepted for any inaccuracies, and no assurances can be made with respect to the results obtained for their use.  The information contained herein may be subject to change at any time without notice. Past performance is not indicative of future results.


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