August brought several significant market changes, especially with a focus on the upcoming Federal Reserve (Fed) meeting in September. Investors have been eagerly anticipating potential interest rate cuts, which could have a broad impact on markets. Let's take a closer look at some of the key highlights from August and what they might mean moving forward.

1. Major Stock Index Performance

Inflation readings in August supported the Fed's broader goals, with key indicators such as the Consumer Price Index (CPI), Producer Price Index (PPI), and the Core Personal Consumption Expenditures (PCE) Price Index aligning with expectations. Here’s a snapshot of how the major stock indexes performed:

• S&P 500: Rose by 2.28%
• Nasdaq 100: Dropped by 1.10%
• Dow Jones Industrial Average: Achieved a fresh all-time monthly closing high, gaining 1.76%

2. Cooling Inflation

Inflation continued to cool in August, further fueling speculation of a Fed victory and the likelihood of rate cuts. The key question now is whether the cut will be by 25 or 50 basis points. The annual inflation rate in August slowed to 2.9%, marking the lowest rate since 2021.

3. Government Bond Yields Drop

The 10-year Treasury note yield fell for the fourth consecutive month, settling at 3.912% by the end of August. This approximately 19.8 basis points decrease has boosted bond prices, benefiting long-term fixed-income investors.

While rising interest rates in 2022 and early 2023 made some investors uncomfortable, it’s important to remember that yields have been much higher historically. For instance, 30-year mortgage rates exceeded 17% in 1981 and 1982.

4. Labor Market Data Slows Down

The labor market showed signs of slowing, with 114,000 jobs added in July— a sharp drop from June's numbers. Unemployment also ticked up to 4.3%, indicating some easing in labor market tightness.

5. The Takeaway

August began with volatility, but it dissipated quickly. As September kicks off, be mindful that it is historically the most volatile month of the year. Long-term investors can expect continued cycles of market expansion and contraction. Whether you seek opportunities in fixed-income investments or prefer to stay the course, maintaining a long-term perspective is key.



If you’re considering your options or have questions about market developments, schedule a consultation with Cooper Eagle LLC today to explore your financial strategies in this evolving market landscape.