Investors were caught up in a love story in August, and not just because Taylor Swift and Travis Kelce got engaged.
It was a broadly positive month as markets continued their summertime rally. While the labor market showed some signs of softening, inflation remained relatively stable, boosting the probability for a Fed rate cut on the horizon. Earnings were also stronger than expected, supporting a more risk-on appetite throughout the month.
The CRSP US Small Cap Index was the leader, gaining 4.59% as smaller companies reacted more strongly to the potential for lower rates. The Dow Jones Industrial Average, S&P 500, and Nasdaq 100 were also positive, with gains of 3.42%, 2.03%, and 0.92% respectively. Value fared better than growth as tech stocks took a breather, with both cyclical and defensive sectors faring relatively well for the month.
International markets mirrored their US counterparts, with developed international stocks advancing 4.43% and emerging markets rising 3.47%. The eurozone saw a boost in manufacturing alongside an increase in economic activity, and the extended trade truce between the US and China helped boost emerging countries despite some challenges in India.
Bonds were also positive in August, rounding out the strong month. Aggregate US bonds rose 1.20% as the 10-year Treasury yield fell from 4.37% to 4.23%, supporting bond prices. While the Fed didn’t hold an official meeting, Chairman Jerome Powell pointed to a potential shift in policy, signaling there could be a rate cut as early as September. Investors are currently pricing in two cuts for the remainder of the year.
As summer winds down, markets have remained relatively resilient despite the uncertainties earlier in the year. Sentiment has continued to improve, with economic data and strong corporate earnings supporting the recent rally. This highlights why it’s important to remain focused on the bigger picture. Maintaining a disciplined investment strategy and aligning it with longer-term goals can help investors stay poised when the market environment shifts quickly.
It’s finally time to end that party from 1999…
AOL announced it will be permanently logging off by the end of September, ending its dial-up internet service.
This came as a surprise, with many people asking “dial-up still exists?” It has persisted in large part because some rural areas don’t have access to high-speed internet yet.
At its peak, the beeping and screeching of a modem, along with the phrase “you’ve got mail” defined the early internet experience for more than 23 million subscribers.
However, as broadband and wireless made dial-up obsolete, the number of users dropped to around two million in 2015 and to the low thousands by the 2020’s.
While the goodbye is bittersweet, at least mom and dad can finally throw out the CD that’s been gathering dust in the computer room drawer.
In another blow to nostalgia, America’s longest-running camera company warned its future looked uncertain.
Kodak, which is more than 130 years old, said it doesn’t currently have enough money to pay its debts coming due within the next 12 months.
After a short resurgence during the pandemic, Kodak has seen profits slump. In its most recent quarter, the company reported a $26 million loss compared to a $26 million gain during the same time last year.
Despite the doubts, Kodak is looking for ways to raise cash, including ending its pension plan which could free up close to $300 million to go towards its debt service.
Looking forward, the company has been trying to pivot to other industries. With roots in printing and chemical, it’s set to open a pharmaceutical plant which it hopes can help return the company to profitability.
Broad Market Returns
| Asset Class | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | 2.08% | 9.81% | 10.79% | 15.97% |
| NASDAQ (QQQ) | 0.95% | 10.00% | 11.87% | 20.44% |
| Large Cap Growth (VUG) | 0.76% | 11.14% | 12.01% | 22.72% |
| Large Cap Value (VTV) | 3.49% | 7.49% | 9.45% | 8.40% |
| Small Cap Growth (VBK) | 3.77% | 11.25% | 4.96% | 12.74% |
| Small Cap Value (VBR) | 5.31% | 11.00% | 6.54% | 7.45% |
| Developed International (VEA) | 4.43% | 6.47% | 24.32% | 15.49% |
| Emerging Markets (VWO) | 3.47% | 9.95% | 17.46% | 18.82% |
| REITs (VNQ) | 3.48% | 4.28% | 5.64% | 0.72% |
| Aggregate Bonds (BND) | 1.15% | 2.42% | 4.97% | 3.08% |
| Corporate Bonds (VCIT) | 1.31% | 3.32% | 6.79% | 5.55% |
| High Yield Bonds (JNK) | 1.20% | 3.38% | 6.19% | 7.61% |
| Long Term Treasuries (VGLT) | 0.34% | 1.90% | 2.65% | -4.41% |
| International Bonds (BNDX) | 0.14% | 0.36% | 2.03% | 3.46% |
Market Health Indicator
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
Fun Facts
- The Dow Jones Industrial Average was formed with 12 companies on May 26, 1896. General Electric was the last original member, but was removed from the Index in 2018.
- Don’t worry if you forget to set your alarm… September 5th is National Be Late for Something Day.
- Covering roughly 9% of its surface area, Canada has more lakes than any other country in the world.
- Scotland has 421 different words to refer to snow, such as sneesl (to start snowing) and flindrikin (a slight snow shower).
– The Aspire Wealth Team
Weekly Wake-Up
