The Ultimate Guide to August Market Performance: Stocks Defy Gravity as Gold Leads Asset Class Gains
As the world's top investment manager and financial market journalist, I am here to break down the latest market performance in August for you. Despite a drop of 8% from its peak in early August, the market managed to rally by the end of the month, delivering a total return of 2.4% and edging closer to a record high.
According to Bank of America strategists, the adage "best days often follow worst days" proved true this summer as stocks continued to defy gravity amidst volatile markets. August marked the fourth consecutive month of gains and the ninth positive month in the past ten months.
The volatility index spiked to 65 during intraday trading last month, reaching a post-COVID high, but then declined at the fastest rate on record.
All major asset classes posted gains in August: long-term Treasuries rose 2.0%, investment-grade corporate bonds increased 1.5%, and cash returned 0.5%. Gold led asset class performance with a return of 3.6%, bringing its cumulative return since the end of 2021 to 39%, compared to the S&P 500’s 24%.
International equities lagged behind U.S. stocks in local currency terms but outperformed in USD terms amid a decline in the U.S. dollar. Sector-wise, defensive sectors like Staples, Health Care, and Utilities led amid concerns about an economic slowdown, while cyclicals like Energy and Consumer Discretionary struggled.
High-quality stocks outperformed low-quality stocks in August, marking the third consecutive month of outperformance. However, year-to-date, low-quality stocks remain well ahead.
In conclusion, the market continues to show resilience and strength despite challenges. Investors should pay attention to the performance of different asset classes and sectors to make informed decisions about their portfolios. Stay tuned for more updates on market trends and analysis to optimize your investment strategy.
