Jin Lee | Bloomberg | Getty Images
Wall Street suffered from whiplash throughout August as headlines and recession fears drove the stock into a wild rally last full summer month.
The S & P 500 recorded 11 moves in August of more than 1% in 22 trading sessions. These moves included three declines of at least 2.6% and the worst day of the index on 5 August. The Cboe Volatility Index (VIX), widely regarded as the best indicator of anxiety on Wall Street, traded at 24.81
The hacked trading activity this month was mainly driven by two factors: an escalation in trade relations between the US and China and a recession signal emanating from the bond market. With trading pressures likely to continue and bonds continuing to suggest a recession, the volatile market series is expected to continue.
"It's not just normal volatility, they've had that rise in recent trading days," said Willie Delwiche, investment strategist at Baird. "Whether this continues or not, from the headline perspective, I see no reason why it is not so."
Here's what happened in August From September 1, 10% duty will be raised to $ 300 billion on Chinese imports. The announcement ended that day a gain of more than 1% on the S & P 500. The index ended the session on August 1 with a loss of 0.9%.
On August 5, Trump accused China of manipulating his currency after the yuan dropped to a level that had not been seen in more than 10 years. The S & P 500 fell nearly 3% that day.
"Trump likes being the tough guy," said Maris Ogg, president of Tower Bridge Advisors. "If the story is a guideline, he will go forward and be the tough guy."
"I would be surprised if we made progress," Ogg said, referring to the trade talks. "I suppose the Chinese do not want him as president, so they will make it difficult for him."
The shares sought to stabilize after the sharp decline after the US announced that some tariffs on certain goods would be delayed from China. However, the positive sentiment in the market was short-lived as 10-year government bond yields fell below 2-year yields.
This is called inversion of the yield curve and feared by experts as it preceded recession periods in the past. The 2-10 yield curve initially reversed on an intraday basis on August 14, prompting investors to sell stocks for long-term US debt and other traditional safe havens such as gold and silver. The Dow Jones Industrial Average Collapsed
"The yield curve has to steepen again, led by a rise in longer-dated yields to set a more positive long-term signal for the economy and equities," said Tom Essaye, founder of Seven Report, in a note.
Trading tensions escalated again last week after China unveiled $ 75 billion in new tariffs on US products. Trump called on US companies to relocate their business from China and announced higher tariffs on a number of Chinese goods.
Stocks rallied in the final week of the month as both countries softened their trade rhetoric. The Chinese Foreign Ministry announced Friday that negotiators from both countries maintained "effective communication" while Trump held some trade talks . Overall, however, the S & P 500 lost nearly 2% in August, reporting its worst monthly performance since May, down 6.6%.
Many losers, but also some winners
The energy and finance sectors fared the worst in August. Over the month, they fell 8.7% and 5.1%, respectively, as the trade war and the inverted yield curve dampened expectations for global growth.
Concho Resources was the largest decline in energy stocks and lost a quarter of its value in August. Schlumberger and Devon Energy slipped 20%.
Among the big banks, Bank of America was the biggest loser, down 10%. Citigroup, J.P. Morgan Chase and Wells Fargo also lost at least 3.8% during the month.
Technology stocks also fell as the sector lost 1.7% as stocks such as Skyworks Solutions fell more than 11% over the month. Overall, eight of the 11 S & P 500 sectors fell during the month.
The big winners in August were traditional safe havens such as gold, silver and long-term bonds. The SPDR Gold Trust (GLD) gained more than 7% over the period, while the iShares Silver Trust (SLV) gained more than 12%. The iShares 20+ Year Treasury Bond ETF (TLT) also gained 10.8% in August.
No break for equities in September
Investors hoping for the turn of the calendar might be wrong if the story would calm things down This is an indication.
Since 1950, September was the worst month for the S & P 500 on average. Data from the Stock Trader Almanac show that the S & P 500 lost an average of 0.5% in September  "It's going to bale more than exhale and expect something to change," said Baird's Delwiche.
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