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Monthly Market Recap: August 2023
Month in Review
- Major stock indices broke a two-month streak of gains, with all major indices finishing down for the month.
- Growth companies regained favor after two months of value and small cap companies leading the market.
- Bond prices declined due to rising interest rates.
Insight on Inflation
Despite the market volatility, evidence from July’s inflation report suggests progress towards a “soft landing” scenario, where inflation is gradually decreasing, and the economy avoids a recession. In July, headline inflation was at +3.3%, year-over-year, down from its peak of 9.1% in June 2022. Unlike June 2022, supply chains and goods have largely normalized, with wages and services being the key drivers of inflation today.
Source: BLS, FactSet, J.P. Morgan Asset Management. CPI used is CPI-U and values shown are % change vs. one year ago. Core CPI is defined as CPI excluding food and energy prices. The Personal Consumption Expenditure (PCE) deflator employs an evolving chain-weighted basket of consumer expenditures instead of the fixed-weight basket used in CPI calculations. Guide to the Markets – U.S. Data are as of August 31, 2023.
What’s on Deck for September?
- The August jobs report supplied additional evidence towards a “soft landing” outcome – more people joined the workforce while wage growth slowed, indicating steady but slower economic growth.
- A “soft landing” could lead to the Federal Reserve not needing to raise interest rates as high as previously predicted, potentially benefiting stocks and bonds.
- Investors will now pay close attention to the September and November Federal Reserve meetings for clues about future rate hikes or general shifts in policy.
Download the August 2023 Market Recap below:
