US stock market ended the month of August lower amidst increasing fear of a global recession. What is interesting to note is the emerging new trend in the market. US equity markets are still having trouble gaining stability and direction. Even while US equities markets began the week with some early success on Monday and Tuesday, they went on to give up those gains and end the day lower on both days. This trend looked poised to continue this morning, as indices opened firmly higher only to turn negative one hour later.
S&P 500, Nasdaq Composite, and Dow 30 closed 4.82%, 6.73%, and 3.97% lower respectively over the last 1-month period. S&P 500 is now down by nearly 8% from its recent August 16 highs.
US stocks declined on Wednesday, reaching their lowest levels of the week and failing to maintain an early surge for the third week in a row. Some of the weaker sectors were apparel, housing-related retail, electricals, airlines, manufacturing, industrial metals, and chemicals. Better performers included media and entertainment, food, investment banks, exchanges, software, the internet, and Chinese Internet companies. Although META and NFLX saw considerable gains, FANMAGs were mixed.
Markets around the world remained volatile due to growing concerns of a worldwide recession. Fed’s Powell had already warned of more pain to the economy as a result of hikes in rates to tame inflation. Investor sentiment was dampened by growing worries about a downturn in global growth in the context of tightening financial conditions.
Equities tend to underperform in the month of September, as the past stock market data shows. Going forward, it remains to be seen how US CPI numbers come in for the month of August and how much a rate hike they will Fed go for in its September FOMC meeting. The real impact of a rate hike on the economy may still be a few quarters away, and till then the stock market volatility could be at a high.