We’re a week into August, and trade tensions have been the biggest driver of U.S. stocks, as we predicted in our latest Weekly Market Commentary. Markets don’t like uncertainty, and we are getting a heavy dose of it now.

On August 5, the S&P 500 Index notched its worst day of the year amid President Trump’s decision to level tariffs on the remaining $300 billion of U.S. imports from China. China retaliated by letting its currency (the yuan) weaken beyond the 7 per dollar mark that many had viewed as a line in the sand, as shown in the LPL Chart of the Day, Chinese Currency Move Escalates Trade Dispute. Then,

U.S. stocks have hit another trade-induced summer storm.

The S&P 500 Index fell 3% on Monday, its worst day since December 2018. The index is now about 6% from record highs in U.S. stocks’ worst bout of volatility since May.

As shown in the LPL Chart of the Day, Storms Happen Often in U.S. Stocks, stock volatility this year has been relatively subdued compared to history. The S&P 500 has declined an average of 14% from peak to trough since 1990, and even in positive years, the index has dropped an average of 11% during the year.

“Though the volatility has been uncomforta

August has been one of the worst months for the stock market historically. In fact, it has been the worst month on average for the past 10 years, with the S&P 500 Index down an average of 0.78% for that month [Figure 1]. Last week’s 3.1% slide for the index certainly fit that pattern, which begs the question whether investors should buckle up for more seasonal losses this month. Despite last week’s losses, 2019 has been a good year for stocks — the S&P 500 is up 17% year to date through August 2 and, excluding any losses Monday, still stands just 3% from its all-time closing high on July 26. Here we summarize August&

The Federal Reserve (Fed) completed its U-turn in policy last week. Policymakers announced a 25-basis point (0.25%) rate cut July 31, its first in 10 years [Figure 1].

Rate cuts have been a sobering reality in investors’ short-term memories, as the Fed resorted to a series of rate cuts to get the U.S. economy out of the depths of the financial crisis in 2008–09. The economy is much different now—in strength and in structure—so it has been difficult for investors to understand the Fed’s intentions in this decision.

Fed Chair Jerome Powell’s post-meeting comments made i