U.S. stocks closed out August with monthly gains, holding their ground even as jitters around trade negotiations drove investors out of major indexes elsewhere around the world.
Investors ended the month much as they began it: weighing questions around the future of U.S. trade policy. Stocks slipped after a report Thursday suggested President Trump was planning to move ahead with tariffs on Chinese imports. Separate reports that the U.S. and Canada were unable to reach a trade deal Friday kept major indexes under pressure, although the S&P 500 erased its losses late in the session after officials said they would resume talks next week.
Even as the week’s developments added to investors’ uneasiness around trade, major indexes held on to their gains for both the week and the month. The S&P 500, Nasdaq Composite, Russell 2000 and Dow Jones Transportation Average all rose to fresh highs in August. For the month, the Dow industrials rose 2.2%, the S&P 500 notched a 3% gain and the Nasdaq rose 5.7%—its best showing for August in 18 years.
Much of the advance was driven by large technology stocks, which rallied in August and extended their gains for the year. Apple soared 20% for the month, while Amazon.com jumped 13% and Netflix rose 9%.
Investors were also reassured by upbeat economic data, which showed the U.S. economy grew faster than initially expected in the second quarter and after-tax corporate profits rising at the fastest pace in six years.
“It’s hard to argue with GDP numbers, [and] it’s hard to argue with corporate profits. If we can get some of the obstacles around trade out of the way, the environment is positive,” said Sean O’Hara, president of Pacer ETFs.
The Dow Jones Industrial Average fell 22.10 points, or 0.1%, to 25964.82 on Friday. The S&P 500 added 0.39 point, or less than 0.1%, to 2901.52 and the Nasdaq Composite edged up 21.17 points, or 0.3%, to 8109.54.
Elsewhere, investors broadly pulled back from stocks, sending the Stoxx Europe 600 down 0.8%. The index ended the month lower, hurt in August by worries about the Italian budget in the fall and exposure to emerging markets, which have suffered in recent weeks.
Stocks in Asia also retreated, with the Shanghai Composite falling 5.3% in August despite slightly better-than-expected factory data and Hong Kong’s Hang Seng losing 2.4% for the month.
Worries about U.S.-China trade tensions and the broader health of the Chinese economy have sent Chinese stocks sharply lower in recent months.
“Trade is only part of the problem. It’s exacerbated the growth slowdown they were trying to navigate already,” said Brian Jacobsen, a multiasset strategist at Wells Fargo Asset Management. “Until you get clarity on the trade situation, we’re going to continue to see a struggle.”
India’s rupee and the Argentine peso recently hit record lows, while Turkey’s lira was poised to notch a 25% decline against the U.S. dollar for the month.
“The lira doesn’t have anything that supports it at the moment,” said Cristian Maggio, head of emerging-markets strategy at TD Securities. “The macroeconomic picture is not good, especially when one looks at inflation.”
Christopher Peel, chief investment officer at Tavistock Investments, said he sharply reduced his emerging-market exposure in June, but is now looking at opportunities to buy back in, particularly in countries that have low current-account deficits and low levels of dollar debt liabilities that he believes have been unfairly hit by worries around Turkey and Argentina.
“I think the contagion that seeped into wider emerging markets is overdone,” he said, noting it occurred during the month of August, when many market participants are on vacation. “There are some large emerging markets that are very, very cheap.”
—Ben Eisen contributed to this article.