Broker Check

August Recap

September 02, 2022
Share |

August market review

The Federal Reserve’s resolve, the end of a rally, trouble overseas and a strong jobs growth report were some of the ingredients of August’s strange brew of market news and events.

We entered August in the midst of an upswing for stocks that had provided consistent, broad gains since mid-June, likely bolstered in part on the belief that the Fed would cease its interest rate raising plan. The momentum faded mid-August. Then Federal Reserve Chairman Jerome Powell deflated the optimistic speculation. His blunter than usual statement may have added to volatility we saw at the end of the month, leading us to end the month with the mainline indices down.

To mix the signals further, the July jobs report indicated a surprising 528,000 non-farm hires – a number counter to expectations as the Fed tightens the money supply. We also saw second quarter gross domestic product estimates revised – still showing the economy shrank, but to a lesser degree than earlier reports. 

Despite the drama at home, the larger global economic news is happening elsewhere, where the outlook is less mixed than in the U.S. Energy crises in Europe, the U.K. and China continue to hamper those economies, with drought and low water levels further complicating electricity supply in Europe. Europe and the U.K. remain on the brink of recession as their central banks try to rein in high inflation by raising key interest rates – which often produces economic slowing.

The bottom line

We live in interesting times and volatility remains a constant companion. On the other hand, all the bad news may be already priced into the market, providing a reasonable belief that valuation throughout the stock market represents a stable floor. The underlying strength and participation in the recent rally bode well for this assessment.

While the worst of this bear market may be behind us, don’t expect unbridled enthusiasm to follow. Expect setbacks and normal back-and-forth trading ahead, as investors gain more clarity on the path of inflation within the Fed’s tightening program.

We remain thankful for your continuing trust as we help you navigate this era of uncertainty. If you have any questions about this letter, your accounts or anything at all, please reach out at your earliest convenience.


Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the authors and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small-cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. The performance mentioned does not include fees and charges, which would reduce an investor’s returns. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation, and may not be suitable for all investors. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation, and may not be suitable for all investors. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.

Material created by Raymond James for use by its advisors.