U.S. stocks closed the final week and the month of August with gains as optimism grew around potential Federal Reserve rate cuts following a favorable inflation report. The Dow Jones Industrial Average rose 0.9% last week and 4.6% in the past month (as of Friday. The S&P 500 advanced 0.2% last week and 5.7% in the past month while the Nasdaq Composite lost 0.9% last week and delivered a monthly return of 5.6%.
Despite losses in early August, all three major indexes posted gains last month, marking a recovery from the earlier volatility. The S&P 500 recorded four successive months of gains. Investor sentiment was bolstered by the latest update on the Personal Consumption Expenditures (PCE) index, which showed July prices meeting expectations. Core inflation, excluding food and energy, rose 0.2% month on month, in line with forecasts. The annual core inflation rate of 2.6% matched June's level, slightly below the anticipated 2.7%.
Fed Chair Signals September Rate Cut
The Federal Reserve closely monitors PCE inflation levels to gauge the need for interest rate adjustments. Following Chairman Jerome Powell's recent remarks signaling a forthcoming rate cut in September, market expectations for a 0.5% rate cut have increased, though a 0.25% cut remains a possibility due to steady price pressures observed in July.
Tech Sector Impacts August Market Performance
The tech sector wavered in early August on cues of delayed return-on-investments on tech biggies’ huge artificial intelligence (AI) investments. Investors also reacted to NVIDIA’s (NVDA) earnings, which reported both line beats but came up with largely in-line forecasts. Investors sought more optimism from the AI king NVIDIA. The AI behemoth’s subdued performance resulted in a weekly loss for the Nasdaq Composite despite its late-week recovery (read: Cybersecurity ETFs Won in August Despite Tech Volatility).
U.S. Economy Shows Strong Growth
The U.S. economy grew in Q2 at a healthy 3% annual pace, fueled by strong consumer spending and business investment. Consumer spending, which makes about 70% of U.S. economic activity, increased at a 2.9% annual rate last quarter, up from 2.3% in the government’s initial estimate, as quoted on CNBC. The second-quarter growth marked a sharp acceleration from a lackluster 1.4% growth rate in the first three months of 2024.
Best-Performing ETFs of August
Against this backdrop, below we highlight a few winning exchange-traded funds (ETFs) of the month of August.
Global X MSCI Argentina ETF ARGT – Up 16.8%
SPDR S&P Telecom ETF XTL – Up 11%.
ProShares Short Bitcoin Strategy ETF BITI – Up 10.4%.
iShares MSCI Thailand ETF THD – Up 10.3%.
VanEck Indonesia Index ETF IDX – Up 10.1%.
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Global X MSCI Argentina ETF (ARGT): ETF Research Reports
iShares MSCI Thailand ETF (THD): ETF Research Reports
SPDR S&P Telecom ETF (XTL): ETF Research Reports
VanEck Indonesia Index ETF (IDX): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
