August Finished Higher, But Not All Portfolios May Reflect It
A Nexus Wealth Management recap of August 2026
Missoula, Montana
Key Takeaways
U.S. stocks ended August on a positive note. The S&P 500 gained 2.62%, the Dow Jones Industrial Average rose 1.34%, and the Nasdaq Composite climbed 3.93%.
Corporate earnings were outstanding, with S&P 500 revenue increasing 16% year-over-year and strong results across all 11 sectors.
Inflation remained persistent. July CPI increased by 0.1% for the month and 3.4% year-over-year. The Fed's preferred measure, July PCE, registered 3.7% for the headline and 3.3% for the core.
Payrolls in July fell by 23,000, with unemployment at 4.1%. While soft, it didn't indicate a broken labor market.
The Federal Reserve kept interest rates at 3.50%–3.75%. The Jackson Hole meeting offered no signals of an imminent rate cut. Long-term yields remained elevated, with the 10-year near 4.73% and the 30-year at 5.21%.
We maintained a positive outlook on the U.S., Japan, and emerging markets, while remaining cautious on Europe and energy-sensitive developed markets.
For households in Western Montana, the key takeaway is this: strong corporate performance and higher bond yields can occur simultaneously. This is a reason to stay committed to your financial plan, not to chase market trends or step back.
A Month That Rose but Felt Uneventful
August presented a contradiction for many investors. Major U.S. indexes closed in positive territory, and corporate results were robust. Companies like Nvidia, Salesforce, and CrowdStrike boosted confidence in the AI investment cycle. Yet many investors reviewing their portfolios felt the month wasn't as strong as the headlines suggested.
This disconnect was driven by competing forces. Strong earnings pushed markets forward, but sticky inflation, unchanged Fed rates, and elevated long-term bond yields applied downward pressure. Higher yields compressed stock valuations despite rising earnings expectations, leaving prices lagging behind business fundamentals.
At Nexus Wealth Management, we interpreted August as a mixed bag for the households we serve. This recap summarizes what supported the markets, what created headwinds, and what it means for personal financial planning, workplace retirement plans, and wealth-building strategies in Western Montana.
The Scoreboard Without the Noise
Here's how the major indexes performed in August:
S&P 500: +2.62%, closing at 7,686.14, with a 12.28% year-to-date gain. Ended a two-month losing streak.
Dow Jones Industrial Average: +1.34%, closing at 53,185.90, up 10.66% year-to-date. Marked its fifth consecutive positive month.
Nasdaq Composite: +3.93%, closing at 26,370.89, with a 13.46% year-to-date increase. Achieved its largest monthly gain since May.
Companies Drove More Than Prices Did
This earnings season was exceptional, supported by strong metrics. S&P 500 revenue grew 16% year-over-year, with earnings climbing nearly 52% (or 32% when adjusted for one-time gains by two major index contributors). About 86% of companies exceeded earnings-per-share expectations, with all 11 sectors reporting revenue growth. Semiconductor companies led in sales, while energy companies posted their strongest earnings since 2022.
This broad performance indicates a solid foundation for U.S. stocks beyond a few headline names. Late in August, strong reports from companies like Nvidia, Salesforce, and CrowdStrike renewed optimism in AI-related investments, supporting the Nasdaq's performance. However, the true takeaway for AI remains selectivity—focusing on chips, power, and data-center infrastructure rather than every company claiming an AI connection.
What Quietly Pressured the Markets
Rising long-term yields were a subtle headwind. By late August, the 10-year yield hovered near 4.73%, while the 30-year reached 5.21%. Higher yields compressed equity valuations from around 23 times earnings to 20 times, even as earnings expectations increased. Companies made more money, but markets were less willing to pay as much for each dollar of it.
Inflation offered little relief for the Fed. July CPI rose by 0.1% for the month and 3.4% year-over-year, with the core measure up 2.5%. At Jackson Hole, Fed Chair Warsh noted only modest progress on inflation, leading to a hawkish stance with no rate cuts in sight.
On the labor front, July payrolls declined by 23,000, and unemployment stood at 4.1%. Although the job market softened, it remained resilient enough to support risk assets without necessitating a rate cut. Energy markets also saw fluctuations, with Brent crude oil rising to $94 before retreating by more than 7%. This volatility affected energy earnings and broader valuations simultaneously.
A Snapshot of Late August
The final week of August showed mixed results across sectors. Technology services, communications, and health services led the way, while energy minerals, manufacturing, and utilities lagged.
For households, the S&P 500's technology concentration remains a key consideration. Technology accounts for 38% of the index, with the top 10 holdings making up over 40%. This means U.S. index funds may be more concentrated than they appear, which is worth understanding before reacting to individual statements or headlines.
International Markets: Strength in Japan and Emerging Markets
We entered August with a positive view on equities, driven by strong earnings rather than expectations of easier monetary policy. The U.S., Japan, and emerging markets remained our preferred regions.
Japan stood out among developed markets, complementing our constructive view on U.S. and emerging-market equities. In contrast, we were cautious on Europe and energy-sensitive developed markets, where a stronger dollar posed a headwind for unhedged returns.
Geopolitical risks, including energy supply constraints near the Strait of Hormuz, remained unresolved. Although markets showed resilience, these risks weighed more heavily on regions reliant on energy imports.
Bonds: A Waiting Game
For income-focused investors, August offered attractive bond yields, with over 80% of the global bond market yielding above 4%. Short- to intermediate-term bonds continued to look more favorable than long-duration Treasuries.
The long end of the curve faced challenges. The 30-year yield at 5.21% pressured long-duration bond prices, as bond values move inversely to yields. With inflation concerns and the Fed's hawkish stance, the environment pointed to "higher for longer" interest rates rather than a near-term easing cycle.
Tight credit spreads also highlighted the limited cushion for taking on additional credit risk. While credit can provide income, it's not a substitute for disciplined portfolio construction.
In 2026, global equities have delivered a 10% excess return over three-month Treasury bills, while global government bonds underperformed cash by 3%. This underscores the opportunity cost of holding long-duration bonds in a rising-rate environment.
What This Means for Missoula
For households in Missoula and across Western Montana, August isn't a reason to overhaul a sound financial plan—it's an opportunity to better understand your portfolio. Wealth management remains about aligning your investments—U.S. concentration, international exposure, and bond holdings—with your personal goals, whether that's planning for retirement, managing a business, or navigating a financial transition.
For plan sponsors, 401(k) benchmarking involves the same principles: evaluating fees, fund options, and participant education. August's market dynamics serve as a reminder to look beyond index performance and assess what's actually in the plan.
At Nexus Wealth Management, we bring institutional-grade research through our strategic partnership with SEI Private Trust Company to the households we serve, grounding it in local expertise. Our job is to help clients stay on track, even when the market feels quieter than the numbers suggest.
About the Author
Robert Montes, CPFA®, serves as the lead Portfolio Manager at Nexus Wealth Management. His expertise lies in analyzing markets, identifying trends, and crafting strategies to help clients achieve their financial goals. Robert's team advises approximately 950 households and manages over 1,300 accounts, making Nexus one of Montana's top-rated wealth management firms.
About Nexus Wealth Management
Nexus Wealth Management is a trusted financial advisory firm based in Missoula, Montana. We specialize in personalized wealth management, retirement planning, investment strategies, and comprehensive financial advice for individuals, families, and businesses.
As an independent fiduciary advisor, we prioritize unbiased, client-focused solutions tailored to your unique goals. Our commitment to transparency and long-term results has earned us over 200 five-star Google reviews and recognition as one of Montana's leading wealth management firms.
Take control of your financial future by visiting nexuswealthmanagement.org or contacting our Missoula team for a no-obligation consultation. Let Nexus Wealth Management be your partner in achieving lasting financial success.
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