Traders
work
on
the
floor
of
the
New
York
Stock
Exchange,
Aug.
15,
2023.
Brendan
McDermid
|
Reuters
Wall
Street
is
really
suffering
through
the
dog
days
of
August.
The
S&P
500
is
down
more
than
3%
this
month,
on
pace
to
snap
a
five-month
winning
streak.
The
broader
market
index
is
also
on
track
to
post
its
worst
monthly
performance
since
December,
when
it
lost
5.9%.
The
Nasdaq
Composite
is
also
headed
for
its
biggest
one-month
loss
since
December,
falling
5.2%.
The
Dow
Jones
Industrial
Average
has
declined
3%
in
August.
These
pullbacks
are
a
contrast
to
the
market
rally
seen
earlier
this
year.
The
Nasdaq
Composite
had
its
best
first-half
performance
in
40
years
in
2023.
The
S&P
500’s
gains
over
the
first
six
months
of
the
year
marked
the
index’s
best
start
to
a
year
since
2021.
There
are
several
things
pressuring
Wall
Street
now,
ranging
from
seasonal
factors
to
concerns
about
the
global
economy
and
the
Federal
Reserve.
Here’s
a
breakdown.
Tough
month
for
the
S&P
500
August
—
historically
a
tough
month
This
behavior
at
this
time
of
the
year
isn’t
out
of
character.
Over
the
past
10
years,
the
S&P
500
has
averaged
a
gain
of
just
0.1%
for
August
—
making
it
the
third-worst
month
for
the
index,
CNBC
Pro
analysis
of
seasonal
trends
showed.
Go
back
20
years
and
the
performance
gets
worse:
The
S&P
500
has
averaged
a
monthly
0.1%
loss
in
that
time.
There
are
several
reasons
the
market
tends
to
see
lackluster
performances
this
month,
including:
-
Lower
trading
volumes:
Trading
tends
to
decline
in
August
as
traders
and
investors
go
on
vacation
before
the
summer
ends.
This
can
lead
to
more
volatile
swings
in
prices. -
Booking
profits
before
September:
While
August
is
a
tough
month
for
Wall
Street,
it
has
nothing
on
September
—
historically
the
worst
of
all
months
for
the
market.
The
S&P
500
has
averaged
a
0.5%
loss
in
September
over
the
past
20
years.
Over
the
past
10
years,
the
S&P
500
has
fallen
an
average
of
1%
each
September.
“The
S&P
500
continues
to
track
its
seasonal
tendency,”
Oppenheimer
technical
strategist
Ari
Wald
wrote
earlier
this
month.
“For
S&P
500
levels,
we
see
4,400
as
the
start
of
support
(50-day
average)
that
extends
down
to
4,200
(Feb.
peak).”
China’s
struggles
Economic
data
out
of
China
has
been
lackluster,
to
say
the
least.
The
world’s
second-largest
economy
earlier
this
month
reported
much
weaker-than-expected
retail
sales
growth
for
July,
while
industrial
production
also
rose
less
than
expected.
A
slowdown
in
China’s
economy
could
spell
trouble
for
markets
around
the
world,
including
the
U.S.,
given
the
sheer
number
of
major
corporations
that
rely
on
the
country
as
a
strong
source
of
revenue.
Additionally,
concerns
over
another
real
estate
crisis
in
China
are
developing.
Heavily
indebted
Country
Garden
Holdings
fell
to
a
record
low
and
was
removed
from
the
Hang
Seng
stock
index
in
Hong
Kong.
Evergrande,
another
Chinese
real
estate
giant,
filed
for
bankruptcy
protection
in
the
U.S.
last
week.
All
this
led
the
Chinese
central
bank
to
cut
interest
rates
this
month.
“The
country
needs
a
good
U.S.-style
restructuring
of
its
real
estate
market,
where
apartment
prices
are
slashed,
debt
is
restructured,
and
new
equity
investors
are
brought
in
as
grave-dancers,”
Ed
Yardeni
of
Yardeni
Research
said
in
a
note
earlier
in
August.
“Until
then,
we’re
left
watching
the
wreckage
unfold.”
Higher
Treasury
yields
Another
source
of
market
pressure
this
month
has
been
concern
that
the
Fed
will
keep
its
benchmark
lending
rates
higher
for
longer
than
anticipated.
Earlier
this
week,
that
drove
the
10-year
Treasury
note
yield
to
its
highest
level
since
2007.
In
a
summary
from
its
July
meeting,
the
Fed
noted
that
central
bank
officials
still
see
“upside
risks”
to
inflation
—
which
could
lead
to
more
rate
hikes.
Specifically,
the
central
bank
said:
“With
inflation
still
well
above
the
Committee’s
longer-run
goal
and
the
labor
market
remaining
tight,
most
participants
continued
to
see
significant
upside
risks
to
inflation,
which
could
require
further
tightening
of
monetary
policy.”
This
all
comes
as
new
data
appears
to
show
inflation
is
moving
closer
to
the
Fed’s
2%
target.
The
consumer
price
index,
a
widely
followed
inflation
gauge,
rose
3.2%
in
July
on
a
year-over-year
basis.
That
rate
is
well
below
last
year’s
pace,
when
CPI
peaked
at
9.1%,
the
highest
in
40
years.
Investors
will
get
more
clues
on
the
potential
for
future
Fed
tightening
on
Friday,
when
Chair
Jerome
Powell
delivers
a
speech
at
an
annual
economic
symposium
in
Jackson
Hole,
Wyoming.
