Monthly Market Update:
Recap of August 2019
August was quite a volatile month. Just in case you missed it, here is what the S&P 500 looked like for August. As you can see, the beginning of August saw quite the drop.
This was first due to the last day of July, the Feds cut the fed fund rate by .25% and investors took the rate cut as a one and done deal, and this turned the market negative. Then a tweet about increasing tariffs from the President made the downward spiral continue.
As if things couldn’t get worse, the inverted yield curve showed its ugly head in August. For those that don’t understand the inverted yield curve, this is when the 2-year Treasury note is higher than the 10-year treasury note. Generally speaking, the longer you loan money to the government, the higher interest they pay, but when an inverted yield curve happens, the opposite takes place. The inverted yield curve is a historical signal for a looming recession.
Final numbers at the end of the month have the S&P 500 down 1.58%, the Dow Jones Industrial Average down 1.32%, the Nasdaq down 2.46% and the Barclays US Aggregate Bond up 2.59%.
International markets did not fare well in August with falling interest rates, inverted yield curves, trade wars, tariffs, Hong Kong protests, Brexit, geopolitical risks and fears of a recession.
Wow, lots of negative news, but not all news was bad news. The jobs report for the month of July showed 164,000 jobs created and the jobless rate continuing to hold at 3.7%. Retail sales and durable good orders did well in July, though consumer confidence numbers were not as strong as they have been.
If you are nervous hearing some of the bad news, it is time to talk. The markets and news should not have a negative effect on your emotions.
Instead, your financial plan should remain your roadmap. Your plan should show the amount of risk needed to achieve your goals and your portfolio should be properly diversified. It is not good to time the market. Though downturns in the market sure cause panic, everyone loves to make money and stay ahead of inflation. The only way to do this is to stick to your plan and stay invested.