In August we had a “Flash Crash” – a sudden and significant drop in the value of the market followed by a quick recovery.
On August 5, 2024, the S&P 500 index fell by approximately 3%1. Despite the initial
shock, the market bounced back quickly. By the end of August, the S&P 500 recovered,
posting a monthly gain of 2.28%. What a bumpy ride!
What Caused It?
- Japan unexpectedly raised interest rates, the yen strengthen against the dollar, and global markets reacted to the sudden change in monetary policy.
- The U.S. released the July jobs report showing lower job growth than expected. This fueled fears of a potential recession, causing investors to panic and sell off their stocks.
- Rising geopolitical tensions in the Middle East.
- High frequency trading. Unfortunately, algorithms exacerbated the situation by rapidly selling large volumes of securities.
Are We Back on Track?
Markets don’t like uncertainty. And right now, I think we are a country that is defined by the uncertainty of the upcoming election and not knowing what policies will be in place in 2025. I think we need to prepare for some volatility.
What Does That Look Like?
Following this email, you will receive an invitation to a special event on Friday, 9/20 from 10-11:30 a.m. Anna Kersten, from JP Morgan will be talking about The Elections and The Markets, and then we will have a special treat as Motivational Speaker, Amy Quesenberry talks about Stress Management Through the Elections and the Holidays.
I hope to see you on the 20th!
In the meantime, stay the course!
Barbara
500, Nasdaq Plummet on Recession Fears; Japan’s Nikkei Drops 12%, Worst Day Since
Black Monday Crash; Treasury Yields (barrons.com)
2. How major US stock indexes fared Friday, 8/30/2024 | AP News
3. Current Employment Statistics Highlights July 2024 (bls.gov)
