---
title: Looking Back at the Markets in July and Ahead to August 2024
description: What are the current market expectations for August? Sam Millette, director of fixed income, takes a look ahead in his latest update.
image: https://blog.commonwealth.com/hubfs/Rebrand-Blog-Images/IMO-images/Look-Back-Ahead/look-back-ahead-c.jpg
---

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# [Looking Back at the Markets in July and Ahead to August 2024](https://blog.commonwealth.com/independent-market-observer/looking-back-at-the-markets-in-july-and-ahead-to-august-2024)

Posted by [Sam Millette](https://blog.commonwealth.com/independent-market-observer/author/sam-millette) 

This entry was posted on  Aug 6, 2024, 11:50:11 AM

 and tagged [Commentary](https://blog.commonwealth.com/independent-market-observer/topic/commentary) 

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![Looking Back and Ahead](https://blog.commonwealth.com/hs-fs/hubfs/Rebrand-Blog-Images/IMO-images/Look-Back-Ahead/look-back-ahead-c.jpg?width=300&height=200&name=look-back-ahead-c.jpg)

July was a mixed month for markets, as investors rotated away from larger technology companies and took a more diversified approach during the month. The S&P 500 and Dow Jones Industrial Average both posted positive returns in July, but the Nasdaq Composite declined modestly. International markets were up for the month, while falling interest rates led to positive returns for bonds.

##### Looking Back

Softening inflation. The June Consumer Price Index (CPI) report showed slowing consumer inflation during the month. Headline consumer prices fell 0.1 percent in June, and year-over-year CPI growth fell from 3.3 percent in May to 3 percent in June. While there is still work to be done to get inflation down to the Fed’s 2 percent target, this marked three consecutive months of softening inflation, which is a welcome sign for the economy.

Lower interest rates. Short- and long-term interest rates fell in July, partly due to signs of weakening inflation. The 10-year U.S. Treasury yield dropped from 4.48 percent at the start of July to 4.09 percent by month-end, with further declines during the first few trading days in August. The falling interest rate environment was a tailwind for fixed income investors, as falling rates caused bond prices to rise during the month.

Potential rebound after market volatility. Markets had a challenging start to the month, with domestic and international equities selling off in the first few trading days of August. The [sell-off](https://blog.commonwealth.com/independent-market-observer/stock-market-sell-off-what-to-expect-next) was largely due to rising investor concerns about slowing growth in the U.S. following the release of the July jobs report. While the early-month volatility was uncomfortable for investors, market drawdowns are a normal feature of long-term investing, and fundamentals remain sound for U.S. companies. In the past, markets have tended to rebound following pullbacks, although past returns are not a guarantee of future returns.

##### Looking Ahead

Slowing growth. While slowing inflation and lower rates were a boon for bonds in July, they may signal slowing economic growth ahead. The July employment report showed a notable slowdown in hiring during the month, and the unemployment rate rose to its highest level in more than two years. This could be an important area to monitor in the months ahead, as potential weakness in the labor market may indicate future choppy economic conditions.

All eyes on the Fed. Given the signs of slowing inflation and hiring in July, investors and economists will be keeping a close watch on the Fed as we approach its next Federal Open Market Committee (FOMC) meeting in mid-September. The FOMC voted unanimously to keep interest rates unchanged at the conclusion of its July meeting; however, Fed Chair Jerome Powell indicated that potential rate cuts were in play for meetings later this year, including the September meeting. Market expectations for interest rate cuts at the Fed’s next few meetings have increased notably since the release of the July employment report.

##### The Bottom Line

Despite the pullback to start August, we remain in a relatively familiar place when looking at the full economic and market picture. While hiring slowed in July, we still added jobs during the month, and signs of a softening labor market follow years of strong hiring growth. The slowdown in hiring is likely indicative of the labor market coming into a more sustainable long-term balance and could help get us to the finish line when it comes to lowering inflation back down to 2 percent.

It’s important to remember that the history of investing is filled with sell-offs, and we’ve seen similar levels of volatility in the past. While markets face real risks, historically, they have been able to weather short-term setbacks and recover swiftly.

Despite the current risks and headwinds, the most likely path forward is continued economic growth and market appreciation, with the caveat that we may continue to see periods of uncertainty along the way.

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