The S&P 500 index experienced its worst August in seven years as traders weighed the prospect of more aggressive action from the Federal Reserve (the Fed) on interest rates to rein in inflation — even if that means some pain for households and businesses.
Here are 3 things you need to know:
- The unemployment rate in August backed up to 3.7% (from 3.5%) driven by a huge increase in the labor force, itself reflecting an increase in prime-age participation and participation among workers ages 16-24.
- Fed chairman Jerome Powell sent a clear message in his Jackson Hole speech on Aug. 26 that the central bank would keep battling high inflation until the job was done.
- The 10-year U.S. Treasury rose back above 3% (3.15% as of Aug. 31) as persistent inflationary pressures have pushed the Fed to accelerate its rate hike trajectory.
- Sources: J.P. Morgan Asset Management – Economic Update; Bureau of Economic Analysis (www.bea.gov); Bureau of Labor Statistics (www.bls.gov); Federal Open Market Committee (www.federalreserve.gov)
- The Barclays Aggregate Bond Index is a broad-based index used as a proxy for the U.S. bond market. Total return quoted.
- The S&P 500 is designed to be a leading indicator of U.S. equities and is commonly used as a proxy for the U.S. stock market. Price return quoted.
- The MSCI ACWI ex-US Index captures large and mid-cap representation across 22 of 23 developed market countries (excluding the U.S.) and 27 emerging market countries. The index covers approximately 85% of the global equity opportunity set outside the U.S. Price return quoted.
- The MSCI Emerging Markets Index captures large and mid-cap segments in 26 emerging markets. Price return quoted (USD).
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