In a significant downturn reminiscent of the end of last year, all sectors of the S&P 500 have experienced losses in the month of August. This marks the first time since December that every sector of the index has fallen simultaneously. Notably, utilities, information technology, and materials are currently experiencing the largest declines this month.
The S&P 500 had been performing exceptionally well, surging by 19.5% in the first seven months of 2023 – the strongest performance for that period since 1997. However, this positive trend has been disrupted in August as concerns over macroeconomic factors and a rise in Treasury rates have weighed on investor sentiment. Many investors are eagerly awaiting comments from Federal Reserve Chair Jerome Powell, which will be delivered on Friday.
The Federal Reserve recently raised interest rates in an effort to combat inflation that, although gradually decreasing, remains higher than desired. There has been speculation among investors that the Fed may soon complete its current cycle of rate hikes, especially considering the slower pace at which it has raised its benchmark rate this year.
While Big Tech stocks had previously driven the stock market’s growth in 2023, the month of August has witnessed declines across all 11 sectors of the S&P 500. These losses range from less than 1% to over 6%, with nine sectors experiencing a drop of at least 4% by Tuesday. Utilities, in particular, saw a significant decline of 6.1%. Information technology and materials sectors both slumped around 5.9% in August, while real estate fell by 5.8% through Tuesday.
Overall, August has been a challenging month for the stock market, as all sectors of the S&P 500 struggle to maintain their previous momentum.
Big Tech Stocks and the Performance of the S&P 500
Big Tech stocks, including Apple Inc., Nvidia Corp., Tesla Inc., and Google parent Alphabet Inc., play a significant role in the S&P 500’s information-tech, consumer-discretionary, and communication-services sectors.
Sectors in Focus
Energy and healthcare sectors have been the best-performing sectors in the S&P 500 this month, with energy experiencing a slight decline of 0.4% and healthcare falling by approximately 0.8%, according to FactSet data.
Market Recap
On Tuesday, the U.S. stock market mostly ended on a lower note due to banks’ shares sliding following S&P Global Ratings’ decision to downgrade some smaller firms in the banking sector. The Dow Jones Industrial Average closed down by 0.5%, while the S&P 500 slipped by 0.3% and the tech-heavy Nasdaq Composite edged up by 0.1%. Financial stocks within the S&P 500 also took a hit, falling by 0.9%, making it the worst-performing sector of the day, as reported by FactSet data.
Overall Performance
As of Tuesday’s closing, the broad S&P 500 index is down about 4.4% from its July 31st peak but still shows a positive gain of 14.3% for the year, based on data from Dow Jones Market Data.