Global markets advanced in August as solid corporate earnings and continued AI investment supported equities. Commodity markets also performed strongly, while bonds posted modest gains as markets adjusted to shifting interest-rate expectations.

U.S. equities rose 2.7% during the month, bringing year-to-date returns to 13.1%. Leadership continued to broaden beyond the largest technology companies, with both growth and value stocks advancing. Energy, health care, materials, and technology were among the stronger-performing sectors, while smaller companies lagged large caps amid interest-rate uncertainty. Strong second-quarter earnings and continued AI investment supported equities, though investors remained selective within technology names.

International equities continued to perform well in August, extending their gains for the year. Developed markets are up 14.2% year-to-date, while emerging markets rebounded during the month and are now up 24.4% YTD. AI-related companies in Taiwan and South Korea remained important contributors, as semiconductor manufacturers continued to benefit from global investment in AI infrastructure. The softer U.S. dollar provided an additional tailwind to non-U.S. returns, although performance remains concentrated in technology and semiconductor-related areas.

Fixed income markets posted modest gains in August, with U.S. bonds rising 0.4% but remaining slightly negative year-to-date. High-yield bonds were a standout as investors continued to favor credit, while short-term Treasury yields moved higher on shifting expectations for Federal Reserve policy. Longer-term yields were broadly stable, although inflation and heavy government borrowing continued to weigh on the outlook for bonds.

Commodities were among August’s strongest performers, with the Bloomberg Commodity Index gaining 7.4% and rising 32.1% year-to-date. Crude oil edged higher as ongoing conflicts raised concerns about potential supply disruptions. Gold was also strong, rallying 9.5% in August and bringing its year-to-date return to 2.0% as investors sought protection from inflation and geopolitical risks.

A globally diversified 60/40 portfolio is up 8.6% year-to-date. Strong equity returns have more than offset modest weakness in core bonds, highlighting the benefits of diversification as leadership continues to broaden across markets.