Market Commentary – Aug 2013

The Markets

After July’s record closes for the S&P 500, the Dow industrials, and the Russell 2000, equities melted like ice cream in August. Renewed fears of Fed tapering, anxiety about the prospect of a U.S. military strike in the Middle East, typically low late-summer trading volumes, and the potential for an eventful September combined to raise investor unease. In equities, the large-cap dividend-paying Dow industrial stocks took the brunt of the selling as investors began to eye rising interest rates in the fixed-income world. Despite a three-hour “flash freeze” in trading of Nasdaq securities, the Nasdaq’s August losses left it with the month’s best performance, while the Global Dow did better than its U.S. peers.

As September’s highly anticipated Fed monetary policy meeting drew closer, the benchmark 10-year Treasury yield soared to levels not seen in more than two years. Since bond prices move in the opposite direction from yields, bond markets generally suffered. That was particularly true for muni bonds, which also were hit by spillover anxiety after Detroit’s July bankruptcy declaration. Gold gained almost $100 during the month before falling back slightly to end at just under $1,400 an ounce. Oil prices hovered around $107 a barrel for most of the month as Middle East conflicts heightened concern.

Equities data reflect price changes, not total return.

Source: Broadridge