August turned out to be a rough month for investors. There was a lot of worry about China’s economy slowing down and uncertainty about when the Federal Reserve might raise interest rates. These issues led to a notable drop in stock prices for the month. Even though there was some recovery, the Standard & Poor’s 500 index ended August down by 6.3%, its worst performance since May 2012.
The decline started mid-month when China unexpectedly devalued its currency to try and boost its economy. However, this move seemed to backfire. Investors around the world saw it as a warning sign of slower-than-expected growth in China, which is the world’s second-largest economy. This, combined with another significant drop in Chinese stock prices, raised concerns in Asia, Europe, and the Americas.