August once again lives up to its dismal reputation for stocks

Wall Street is truly suffering done the canine days of August.

The S&P 500 is down much than 3% this month, connected gait to drawback a five-month-long winning streak. The broader marketplace scale is besides connected way to station its worst monthly show since December — erstwhile it mislaid 5.9%.

The Nasdaq Composite is besides headed for its biggest one-month nonaccomplishment since December, falling 5.2%. The Dow Jones Industrial Average has declined 3% successful August.

These pullbacks are a opposition to the marketplace rally seen earlier this year. The Nasdaq Composite had its champion first-half show in 40 years successful 2023. The S&P 500's gains implicit the archetypal six months of the twelvemonth marked the index's champion commencement to a twelvemonth since 2021.

There are respective things pressuring Wall Street now, ranging from seasonal factors to concerns astir the planetary system and the Federal Reserve. Here's a breakdown.

Tough period for the S&P 500

This behavior, astatine this clip of the year, isn't retired of character.

Over the past 10 years, the S&P 500 has averaged a summation of conscionable 0.1% for August — making it the third-worst period for the index, CNBC Pro investigation of seasonal trends showed. Go backmost 20 years and the show gets worse: The S&P 500 has averaged a monthly 0.1% nonaccomplishment successful that time.

There are respective reasons wherefore the marketplace tends to spot lackluster performances this month, including:

"The S&P 500 continues to way its seasonal tendency," wrote Oppenheimer method strategist Ari Wald earlier this month. "For S&P 500 levels, we spot 4,400 arsenic the commencement of enactment (50-day average) that extends down to 4,200 (Feb. peak)."

Economic information retired of China has been lackluster to accidental the least. The world's second-largest system earlier this period reported overmuch weaker-than-expected retail income maturation for July, portion concern accumulation besides roseate little than expected.

A slowdown successful China's system could spell occupation for markets astir the world, including the U.S., fixed the sheer fig of large corporations that trust connected the state arsenic a beardown root of revenue.

Additionally, concerns implicit different existent property situation successful China are developing. Heavily-indebted Country Garden Holdings fell to a grounds low and was removed from the Hang Seng banal scale successful Hong Kong. Evergrande, different Chinese existent property giant, filed for bankruptcy extortion successful the U.S. past week. All this led the Chinese cardinal slope to chopped involvement rates this month.

"The state needs a bully U.S.-style restructuring of its existent property market, wherever flat prices are slashed, indebtedness is restructured, and caller equity investors are brought successful arsenic grave-dancers," Ed Yardeni of Yardeni Research said successful a enactment earlier successful August. "Until then, we're near watching the wreckage unfold."

Another root of marketplace unit this period has been interest that the Fed volition support its benchmark lending rates higher for longer than anticipated. Earlier this week, that drove the 10-year Treasury enactment output to its highest level since 2007.

In a summary from its July meeting, the Fed noted that cardinal slope officials inactive spot "upside risks" to ostentation — which could pb to much complaint hikes. Specifically, the cardinal slope said: "With ostentation inactive good supra the Committee's longer-run extremity and the labour marketplace remaining tight, astir participants continued to spot important upside risks to inflation, which could necessitate further tightening of monetary policy."

This each comes arsenic caller information appears to amusement ostentation is moving person to the Fed's 2% target. The user terms index, a wide followed ostentation gauge, rose 3.2% successful July connected a year-over-year basis. That complaint is good beneath past year's pace, erstwhile CPI peaked astatine 9.1%, the highest successful 40 years.

Investors volition get much clues connected the imaginable for aboriginal Fed tightening connected Friday, erstwhile Chairman Jerome Powell delivers a code astatine a yearly economical symposium successful Jackson Hole, Wyoming.