Stocks That Performed Best in August According to the S&P 500

August brought heightened volatility for the S&P 500, but what began as a rough ride turned into a positive finish. The S&P 500 experienced a 6.1% decline during the first three trading sessions of the month, only to reverse course and close August with a 2.3% gain. So far this year, the S&P 500 has climbed 18.4%, following a 24.2% increase in 2023. All the price changes mentioned here are based on the index's performance, excluding dividends.

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Examining the performance of the S&P 500’s 11 sectors in August reveals some interesting trends, especially as investors anticipated an upcoming cycle of interest rate cuts by the Federal Reserve. Slower-growing, value-oriented sectors of the stock market took center stage. These sectors, which include companies trading at lower multiples of earnings, sales, or book value, often benefit more from lower interest rates. This is because they typically have higher levels of debt compared to rapidly growing tech companies, whose expansion is primarily driven by cash flow rather than borrowing.

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Federal Reserve Chair Jerome Powell set the tone for the market when he announced at the Jackson Hole Economic Policy Symposium on August 23 that "the time has come" for lower interest rates. This statement signals the potential start of a cycle of rate cuts, likely beginning with the Federal Open Market Committee’s two-day policy meeting in September.

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Best-Performing Stocks in August

In August, 71% of the stocks in the S&P 500 posted gains, with 52 of them rising by double-digit percentages. The top performers among them included:

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1. Kellanova (formerly Kellogg’s): Kellanova, which owns popular snack brands like Pringles and Cheez-It, was previously known as Kellogg’s before it split off its cereal business into the newly formed WK Kellogg Co. in October. On August 14, Kellanova agreed to be acquired by Mars for $83.50 per share in cash, valuing the deal at approximately $35.9 billion. By the end of August, Kellanova’s shares closed at $80.53, reflecting a 4% discount to the acquisition price.
2. Starbucks Corp.: Starbucks had a remarkable August, with its stock rising by 21.3%. This gain helped the company recover some ground after being down slightly for the year. The positive momentum followed a disappointing quarterly earnings report on July 30. However, investors were optimistic after Starbucks announced on August 13 that Brian Nicol would take over as CEO in September. Nicol, who was previously the CEO of Chipotle Mexican Grill Inc., boosted investor confidence, leading to a 24% surge in Starbucks’ stock on the day of the announcement.
3. CrowdStrike Holdings Inc.: CrowdStrike had a challenging July, finishing as the second-worst performer in the S&P 500. However, the cybersecurity firm staged a comeback in August, ranking as the sixth-largest gainer in the index. Investors had been concerned about the impact of a CrowdStrike software update that caused a significant technology outage in July, frustrating customers and affecting business. However, when CrowdStrike reported its earnings, it reset expectations by cutting its guidance while reassuring investors that its customers remained committed to doing business with the company.
4. Fortinet Inc.: Another cybersecurity company, Fortinet, also impressed investors with its outlook earlier in the month. This came after a previous quarter’s disappointing report, making the positive outlook a welcome change for the company’s stock.

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Worst-Performing Stocks in August

On the other end of the spectrum, some stocks struggled during August. Among the most notable was Super Micro, which faced its worst month on record. Despite the challenging performance, the company offered a bit of relief to investors, signaling potential for recovery.

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Overall, August was a month of contrasts for the S&P 500. What began as a period of increased volatility and concern over economic growth and interest rates ended with a strong rebound, driven by a shift in investor sentiment and anticipation of future Federal Reserve actions. The mixed performances of individual sectors and stocks reflected the broader uncertainty in the market, as investors weighed the potential benefits of lower interest rates against the risks of a slowing economy. As September approaches, all eyes will be on the Federal Reserve and its next moves, which are expected to have a significant impact on the market’s trajectory for the rest of the year.

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