August, a Month That Gave Markets a Shake

By Akane Otani Features Dow Jones Newswires

A topsy-turvy August is coming to its end. The Nasdaq Composite gave up ground for the first month this year 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 so far 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 broader stock indexes 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's Rally Stalls

One of the best-performing U.S. stock indexes hit a roadblock in August. The Nasdaq Composite, which has jumped past the S&P 500 and Dow Jones Industrial Average this year as investors poured money in technology stocks, is on course to end the month without having set a single record. If the index fails to hit a new high Thursday, it would mark the first time this year that the Nasdaq failed to post a new high in a month.

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

(END) Dow Jones Newswires

August 31, 2017 12:52 ET (16:52 GMT)