Dear Investor,
Core PCE inflation, an important measure for the Federal Reserve, rose by 2.9% in July, in line with expectations. This fueled discussions about a possible interest rate cut in September, especially after Fed Chairman Powell's speech at the Jackson Hole Summit, in which he hinted at a cut on September 19. Because small-cap stocks require relatively high levels of debt financing, an interest rate cut reduces costs for these types of companies. This was one of the reasons why the Russell 2000 outperformed other stock markets in August, with a gain of 7.2%.
The news of weak job figures on August 1 put a lot of pressure on stock prices. The month therefore got off to a bad start with losses on the US stock markets. The Russell 2000 Index performed relatively well and managed to post slightly higher prices throughout the month. ESSC also ended the month on a positive note with a gain of 3.63%. For the year as a whole, the gain now stands at 7.52%.
Echostar Corporation shares were a big winner last month. Sanmina-Sci Corporation was the biggest loser.
September offers potential for a rally due to Fed easing, but volatility dominates due to import tariffs and labor market weakness.
Sincerely,
Henry van Ginkel