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But signs of a resilient economy and cooling inflation drew investors off the sidelines and bolstered risk appetite in the months that followed, fueling a nearly 14% rise in the S&P 500 this year. The upshot, some believe, is that there is now less cash on the sidelines to drive further gains and fewer skeptical investors to win over.
Weighing heavily on the S&P 500, CVS Health tumbled 8% on news that Blue Shield of California plans to cut its reliance on the company as its pharmacy benefit manager (PBM) and work with others including Amazon.com.
Banks saw the brunt of the selling as investors grew more anxious about interest rates. The U.S. Treasury yield curve has been inverted for over a year, with longer-term bonds yielding less than short-term debt instruments. This persistent situation pressures profits that banks can earn on loans.
After a five-month rally pushed the benchmark S&P 500 and Nasdaq Composite within 5% of their lifetime highs, August has now recorded five losing sessions out of six. The S&P is down 2% this month, with the Nasdaq dropping 3.2%.
U.S. stocks have sharply rallied in 2023, with the benchmark S&P 500 rising 17.7% this year, fueled by optimism around artificial intelligence and hopes of a soft landing for the world's largest economy.