August Market Review

August market review

The
financial markets stood strong against tariff pressures last month, with the
S&P 500 hitting its 20th record high so far this year. That performance was
driven largely by earnings surpassing expectations for the third consecutive
quarter, resulting in widespread gains. Bond yields declined in August, with
the policy-sensitive two-year Treasury yield falling 31 basis points to 3.64%.

Small-cap
stocks were the top performer in August, thanks in part to Fed Chairman Jerome
Powell’s speech in Jackson Hole, where he hinted at a possible interest rate
cut in September. This signaled upcoming relaxation of monetary policy in
response to less-than-stellar jobs numbers, with inflation caused by tariffs
determined to be the lesser of two evils against stagnation of economic growth.

Displaying
broad performance, 10 of 11 sectors were positive for the month of August.
According to Raymond James Chief Investment Officer Larry Adam, “The difference
in sector returns is the narrowest it’s been since 1995. Looking ahead, we
expect that the full effects of tariffs will be felt, and we expect to see
greater dispersion amongst sectors as leaders and laggards emerge.”

Diplomatic
talks among world leaders surrounding the war in Ukraine open the door to a
possible peace deal that could eventually open the region to international
mining operations, but that progress will be slow and is unlikely to resolve
anytime soon. Sticking points include Russia’s insistence on territorial gains,
which are extremely politically unpopular in Ukraine.

The
bottom line

While
tariffs continue to be a source of unease for many investors, the strong
indication of upcoming rate cuts by the Fed presents an opportunity for
economic growth in the near term. While nothing is guaranteed, Chairman
Powell’s comments alongside short-term bond activity paint a rather clear
picture of what’s to come.

With the
markets continuing to hit all-time highs even in the face of significant
headwinds, the outlook is positive overall.

Pendle Hill
Advisors is proud to contribute to the Montgomery County News with our weekly
curated financial news and topics. If you have any questions about the markets,
your financial plan, or anything, please feel free to reach out to our office
for a no cost initial consultation.

Kent Pendleton, AAMS®

Financial Advisor, RJFS

Pendle Hill Advisors LLC

14375 Liberty St, Ste 109 | Montgomery,
TX 77356

T 936-297-8267

Kent.Pendleton@raymondjames.com | www.raymondjames.com/pendlehilladvisors

Material
created by Raymond James for use by its advisors. Securities offered
through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment
advisory services are offered through Raymond James Financial Services
Advisors, Inc. Pendle Hill Advisors is not registered broker dealers and is
independent of Raymond James Financial Services.

Investing
involves risk, and investors may incur a profit or a loss. All expressions of
opinion reflect the judgment of the Raymond James Chief Investment Officer 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. Diversification does not guarantee a profit nor protect against loss.