Monthly Observations from CIO, Chris Zaccarelli

Christopher Demarest |
Categories
Market Commentary

Markets in Review

The S&P 500 rose 2.3% in August, which increased its year-to-date gains to 18.4%. The MSCI All Country World index also rose during the month, gaining 2.4%, improving its year-to-date return to 14.7%. The Bloomberg BarCap U.S. Aggregate Bond index improved by 1.4% on the month, earning a year-to-date gain of 3.1%.

August started out with a big drop in the stock market after a poor jobs report, but quickly recovered and rose to close near all-time highs by the end of the month. Despite the uncertainty around the US presidential election, the economy continues to expand, and unemployment remains low, but it has risen recently and that has some traders worried that the economy is vulnerable to a recession. 

Monthly Highlights

  • The unemployment rate unexpectedly rose to a 3-year high
  • Ukraine made a surprise attack across the border into Russian territory
  • Fed Chair Powell used his speech in Jackson Hole to make a policy pivot

News in Review

Below are some stories that caught our eye this past month. To learn more, follow the links to the full article.

U.S Unemployment Rate Ticks up to 4.3%

The U.S. unemployment rate jumped to a three-year high as employers slowed their pace of hiring and increased fears of a slowdown that could lead to a recession. Historically speaking, 4.3% is a very low number, but in comparison to the five-decade low of 3.4%, which was hit in April 2023, the increase has some investors worried.

Ukraine Expands Their Attacks Inside Russia

Ukraine has gone on the offensive, taking Russian territory in a daring attack, which was a surprise even to its allies. Two and a half years after Russia invaded their country, when the most optimistic estimates gave them a few weeks to survive as an independent country, they are still fighting for their freedom and have enacted a heavy toll on their aggressors. This latest move was an attempt to bring the fight back to where it started and has put Russia on their backfoot in the conflict.

Powell's Jackson Hole Speech Could Prove Pivotal 

Fed Chairman Jerome Powell used his annual speech at the economic retreat and summit in Jackson Hole, WY to speak about the economy and talk about turning from rate hikes to cuts. The Fed was late in raising rates after inflation proved to be more persistent than they had originally thought, but they moved aggressively after realizing their initial mistake and inflation has been moving lower for over a year. Their next move is to start cutting rates, in the hopes of preserving the economic expansion.

Marathon Swimmer Says He Quit Lake Michigan Swim Because of Faulty Equipment

A brave marathon swimmer, Jim Dreyer, called off his attempt to cross Lake Michigan after he realized he was headed in the wrong direction after his GPS malfunctioned. He had already swum 60 miles – out of a total goal of 80 miles – before the weather started to change and he realized he was still 47 miles from his intended destination. Although this attempt failed, he has previously succeeded in crossing the Lake, but that was back in 1998, when he was 34 years old.

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This newsletter was written and produced by the Independent Advisor Alliance, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

S&P 500 INDEX: The Standard & Poor's 500 Index is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. 

NASDAQ 100 INDEX: The Nasdaq 100 Index is an unmanaged, capitalization-weighted index of the largest 100 non-financial stocks traded on the Nasdaq market. Unlike the S&P 500 it does not represent all major industries and may be more volatile than more broadly constructed indices.

MSCI ACWI INDEX: The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries. With 2,495 constituents, the index covers approximately 85% of the global investable equity opportunity set.

Bloomberg U.S. Aggregate Bond Index: The Bloomberg U.S. Aggregate Bond Index is a broad-based index of the U.S. investment-grade, fixed-rate bond market, including both government-related and corporate securities and mortgage-backed and asset-backed securities. 

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