Market Recap: August 2023

Market commentary

• The strong consumer and robust jobs market are supporting the economy, but cracks may be appearing in the unemployment rate and consumer confidence reading.
• Unemployment ticked up to 3.8%, indicating a softer — but not cratering — jobs market.
• Inflation increased slightly month-over-month, but continues to show progress relative to the high levels seen a year ago.

Select economic and market data

Equities

• Equities were weaker in August, with the S&P 500 & Nasdaq suffering their first down month since February.
• Ten of the 11 sectors in the S&P 500 were negative in the month, with Energy the lone bright spot.
• International indices underperformed as European business activity contracted and China’s slowdown continues.

Fixed income

• The Fed’s annual trip to Jackson Hole resulted in relatively benign talking points, with Powell acknowledging the balancing act between over-tightening and containing inflation.
• Yields moved higher in August with the 10-year treasury hitting a 15-year intra-month high of 4.36% before settling at 4.11%.

Strategic outlook

• Above-average volatility is likely given elevated inflation and heightened central bank involvement.
• Some caution is warranted on equities in the near-term; currently favoring small-cap and mid-cap domestic stocks longer-term.
• Incrementally extending duration in the fixed income portfolio as the intermediate part of the curve is becoming more attractive.