- August has historically been a rough month for markets.
- This year proved no exception as the stock rally ground to a halt.
August is often a rough month for markets as investors head off on vacation and trading volume plunges, and 2023 proved no exception.
Stocks tumbled before paring back some of their losses, with Wall Street still trying to figure out how close the Federal Reserve is to ending its long campaign of interest rate rises.
There were still some sources of optimism amid the gloom, though, as the US dollar snapped a two-month losing streak and Nvidia's share price reached a record high following a stellar second-quarter earnings report.
Here are August's biggest winners and losers.
Loser: Stocks
Wall Street's stellar 2023 ground to a halt last month, with the S&P 500 and Dow Jones Industrial Average both slipping, although the tech-heavy Nasdaq Composite managed to eke out another month of gains.
The indices' losses were driven by the Federal Reserve after chair Jerome Powell struck a hawkish tone at Jackson Hole, and monthly inflation data signaled that it might take longer than expected for the central bank to return to the 2% target.
Things could have been worse but stocks enjoyed a strong final week of the month, boosted by economic data that showed the labor market cooling off. That strengthens the idea that there will be fewer rate hikes with the Fed keen to avoid a spike in unemployment.
Bond yields also slipped in the last week of the month, helping to boost stocks' appeal relative to fixed-income assets.
Winner: Nvidia
August wasn't all doom and gloom for stocks, though – as the biggest markets success story of 2023 continued its stellar year.
Nvidia rose 11% over the course of the month after its second-quarter earnings beat Wall Street's expectations and it issued stellar profit guidance signaling the rise of AI has driven up demand for its chips.
The semiconductor giant, which produces about 95% of the graphics processing units (GPUs) capable of powering programs like ChatGPT, is now up a staggering 240% this year, breaking into the trillion-dollar club and solidifying itself as a member of the "magnificent seven" mega-cap tech stocks.
Winner: the US dollar
The dollar remains one of 2023's biggest losers, having dipped more than 5% this year.
That's because the Fed had signaled there was an end in sight for its tightening campaign, which diminishes the appeal of the currency to foreign investors seeking higher yields.
However, the greenback did manage to claw back some of its losses in August on new signs of Fed hawkishness, with the US Dollar Index – which tracks the buck's value against six rival currencies, including the euro and Japanese yen – jumping 2% over the course of the month.
Loser: China
It was another bad month for the world's second-largest economy, which is grappling with deflation, weaker-than-expected growth, and a spiraling property crisis that has put prominent developer Country Garden's existence in jeopardy.
The headlines have been so bad for China that Beijing suddenly stopped reporting youth unemployment data – and has even told prominent economists to stop being so negative in public, the Financial Times reported.
Chinese stocks' struggles in August captured some of that carnage, with the CSI 300 plunging 5%. Meanwhile the renminbi tumbled toward a record low against the dollar as policymakers cut interest rates in a bid to boost the economy.