August, a Month That Gave Markets a Shake -- Update

By Akane Otani Features Dow Jones Newswires

A topsy-turvy August has reached its end. The Nasdaq Composite rallied Thursday, extending a record streak that was earlier in jeopardy as lower-risk investments such as gold and Treasury bonds appreciated. Volatility re-emerged in the stock market and the energy sector's slump deepened as the Gulf Coast oil industry took a heavy blow from Harvey. Here's a look at some of the highlights:

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Low Volatility Streak Ends

The S&P 500 posted more steep moves than usual, ending the day up or down at least 1% on three occasions in August. Low trading volumes likely exacerbated stock moves, analysts say, since many investors and traders leave their desks for vacation in August. Another reason for the moves: political rifts. Stocks swung this month after President Donald Trump faced fallout over his response to protests in Charlottesville, Va., tensions spiked between the U.S. and North Korea and speculation arose about staffing changes in the White House.

Safety Goes Back in Style; Energy Extends Slump

Government bonds and their stock proxies rallied in August as the S&P 500 stalled. Utilities shares in the S&P 500, which many consider bondlike because of their hefty dividends, are on track to close out August as the best-performing sector in the broad index for the month. Meanwhile, shares of energy companies extended their declines for the year, falling beside oil prices after tropical storm Harvey disrupted operations at U.S. refineries and hit demand for crude.

The Euro Rally

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The euro continued to rally, hitting its highest level against the dollar since just before the European Central Bank announced its stimulus program in January 2015. Driving the currency's gains: growing expectations that the ECB will begin tapering its monthly EUR60 billion of bond-buying as it runs out of assets to purchase. The euro is up more than 14% against the dollar so far this year.

The Harvey Effect

Tropical storm Harvey dumped more than 50 inches of rain onto Texas, flooding cities and displacing thousands of residents from their homes. The storm is also estimated to have knocked out a third of Gulf Coast refining capacity -- sending gasoline prices higher as analysts warned of potential shortages while hitting demand for crude.

The Nasdaq Extends Its Rally

A rally in the Nasdaq Composite extended a monthly streak that was earlier in jeopardy. The Nasdaq, which has jumped past the S&P 500 and Dow Jones Industrial Average this year as investors poured money in technology stocks, climbed to a fresh record on the last day of the month -- narrowly avoiding ending August without having set a single record. If the index had failed to hit a new high Thursday, it would have marked the first time this year that the Nasdaq failed to post a new high in a month.

Biotechnology Climbs

Shares of biotech companies jumped, with much of their gains coming in the last week of the month after a string of corporate news. Gilead Sciences Inc. agreed to buy Kite Pharma Inc. for about $11 billion, while the Food and Drug Administration approved a first-of-its kind cancer therapy developed by Swiss pharmaceutical firm Novartis AG -- developments that traders said helped lend fresh momentum to the rally in biotechnology stocks. The Nasdaq Biotechnology Index climbed for a fourth consecutive session on Thursday, bringing its gains for the year to 26%.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

August 31, 2017 16:54 ET (20:54 GMT)