Monthly Archives: August 2024

August bounce back
The markets kicked off August with a stumble, culminating in a sharp meltdown on August 5 that saw the three American indexes fall by more than 2.5% each. Fortunately, this proved to be a one-day selloff. Investors quickly reassessed the situation, recognizing that the American economy remained resilient despite signs of a weakening labour market. Over the following week, investor confidence grew, and the markets gradually recovered, with the four major North American indexes recovering most of their earlier losses by the end of the previous week.

This past week, the recovery continued as favourable economic data rolled in. The US, with the world’s largest economy, appears headed for a soft landing, where inflation continues to fall without triggering a recession. The latest reports showed that inflation is cooling, while retail sales remained strong, though more moderate than a year ago. The cooling job market provides further support for the Fed to start lowering the benchmark rate, although the Fed’s stance on future rate adjustments is data dependent.

This past week began on a shaky note. Weak economic data and disappointing corporate earnings from the previous week fueled fears of a potential recession in the US, the world’s largest economy. A recession—a period of significant economic slowdown marked by declining business profits, rising unemployment, and reduced consumer spending—can spark widespread anxiety. This unease led to a sharp selloff on Monday, starting in Japan and sweeping westward through European markets before hitting North America. By the end of the day, the S&P 500 (S&P) saw its biggest drop in nearly two years, the Dow Jones Industrial Average (DJIA) plunged by 1,000 points, and the tech-heavy Nasdaq Composite index (Nasdaq) recorded its worst start to a month since 2008.