Hi All — Brian here. Picture this: A company releases an earnings report showing quarterly revenue up by over 50% year-on-year. It also forecasts $54 billion in revenue for next quarter, $700 million more than Wall Street had pegged. You might think a stock would soar on that earnings report, right?

But you’d be wrong. The company is the semiconductor giant NVIDIA, and its shares dipped by 3% immediately after the announcement. Despite gains in both revenue and earnings, analysts were concerned that its $41.1 billion in data-center revenue missed earnings estimates by $200 million.

Even a stumble from an index heavyweight did not stop the S&P 500 from closing up 1.9% for the month. The index posted five new closing highs in August and is now up more than 10% year-to-date. This, in spite of tariff uncertainty, shaky jobs data, and a further dip in consumer confidence.

One catalyst was renewed hope of an imminent rate cut. Fed Chair Jerome Powell seemed to put more emphasis on labor market risks than stubborn inflation when he addressed international bankers this month. However, a lot depends on further jobs and inflation data in the run-up to the mid-September meeting.

According to the latest data from the University of Michigan, broad consumer sentiment was down almost 6% from last month. Cooling consumer sentiment may mean consumers pull back on spending as we start to approach the holiday season.

If you're wondering how to prepare your portfolio for potential rate cuts or want to check in on your broader strategy, reach out to schedule a call. We're here to help. In the meantime, let's dive into what happened in August.

AUGUST MARKET PERFORMANCE

AUGUST MARKET SUMMARY

• The Dow Jones outperformed with a 3.2% gain in August after eking out a 0.1% gain in July. It was boosted by strong performances from UnitedHealth Group, Apple, and Home Depot.

• The tech-heavy Nasdaq lost a little steam at the end of the month after reports of AI chip development in China put pressure on Nvidia, Broadcom, and other semiconductor stocks.

• Cracks in the labor market continued to show. The U.S. economy added just 22,000 jobs in August, per the Bureau of Labor Statistics, well below economists’ already tempered expectations. The unemployment rate also ticked up to 4.3%, its highest level since 2021. On top of that, sharp downward revisions of previous months’ data showed a net loss of 13,000 jobs in June, the first decrease in nearly four years.

• Consumer confidence slid by almost 6% in August, falling from 61.7 in July to 58.2. The University of Michigan said concerns about prices and buying conditions had squeezed people's personal finances.

• Revised Q2 GDP numbers from the Bureau of Economic Analysis showed the U.S. economy had grown by 3.3%. This was higher than its initial 3.0% estimate, largely because consumer spending came in above expectations.

• Consumer prices rose 0.2% in July, and were up 2.6% from a year earlier, according to Personal Consumption Expenditures (PCE) price index data released on August 29. Core inflation, which does not include food and energy, was up 2.9% on the year before.

ONE BIG THING: WHAT’S THE MATTER WITH ENERGY

Energy stocks have had a mixed few quarters, with energy in the bottom five performing S&P 500 sectors so far this year. Indeed, the Energy Select Sector SPDR Fund (XLE) is up just 3.5% year-to-date, barely a third of the S&P 500’s return. The fund tracks companies in the oil, gas, and energy equipment and service industries.

This lukewarm performance may seem surprising given that electricity demand seems set to boom. Goldman Sachs says that the AI revolution will juice data center electricity demand by 160% within a few years. Wells Fargo projected that the new power demand from AI will be seven times greater than New York City’s annual electricity consumption by 2030.

For investors, that surge in demand could translate into opportunities in companies that focus on natural gas and energy infrastructure. For example, we're seeing a resurgence in natural gas, fueled by its relative affordability and scalability. A recent Reuters article said there are plans to add another 120 U.S. gas-fired plants in the coming five years.

The energy landscape is transforming. But right now, the price of crude oil still has more impact on energy stock performance than natural gas. And crude oil prices have fallen over 10% so far this year. Oil prices can be volatile and are particularly susceptible to geopolitical shocks, including the impact of Russian sanctions and tensions in the Middle East.

Another big factor is that oil supply is set to reach record highs, while demand appears to be slowing. This year, key OPEC+ countries said they would gradually increase output, phasing out several years of deliberate cuts. Production is increasing in the U.S. as well – the Energy Information Administration estimates it will hit a record high later this year.

Investors who want to capitalize on heightened AI-driven energy demand may want to understand the way market dynamics are shifting. Crude oil prices may fall further into 2026. Energy companies will need to strike a balance between clean energy initiatives and fossil fuels. Companies with a strong focus on natural gas may be worth a closer look.

FEATURED POST

How To Prepare for Interest Rate Shifts

The U.S. Federal Reserve has held interest rates steady since December 2024. Most market observers expect there could be some shifts coming in 2025, most likely starting in September. But how quickly rates fall, how low they will go, and whether they accompany a soft landing or a recession remain to be seen.

Here’s what you need to know →

KEEP READING

CLOSING REMARKS

Our team at Griffin Asset Management is here to help you make the most of the opportunities and challenges ahead.

If you have any questions or would like to discuss your financial strategy, please don’t hesitate to reach out.

We’re always available to set up a call and provide the personalized advice you need. Thank you for your continued trust and partnership.