During August, the equity markets performed positively, with the ACWI*, the S&P 500 and the Dow Jones being the main winners; these indices posted gains of 2.40%, 2.28% and 1.76%, respectively. Likewise, defensive sectors such as consumer staples and healthcare were also favored, increasing 5.78% and 4.99% during the month. The technology sector, although positive, lagged on this occasion.

With the second quarter reporting season over, the outlook and balance sheets of major U.S. companies continued their good trend. These reports showed year-over-year increases in sales of 5.3%, while profits expanded by 11.3% during the same period, both metrics showing solid growth. NVDA's (Nvidia) report, despite beating estimates, did not convince the market, causing an intraday loss in the order of 3.78%. Finally, Berkshire Hathaway became the seventh company to surpass the trillion dollar mark in market capitalization, the only non-technology company in this league.

Turning to economic issues, favorable inflation readings shifted the Fed's focus to prioritizing employment over inflation in its dual mandate. In his August 23 speech in Jackson Hole, Wyoming, the Fed Chairman communicated that inflation levels and trajectory were appropriate and would not allow for an unwanted slowdown in the labor market. That speech laid the groundwork for a first rate cut of at least 25 basis points during September, while the magnitude of this will depend on the data known at the time. The forward frequency puts between 75-100 basis points of rate cuts for the remainder of the year on the table.

Finally, in the local market, the news was not good. The Mexican stock market fell 2.09% during the month, while the exchange rate depreciated 5.68% during the period. Volatility will continue during September with the entry of the new legislative branch and its legislative initiatives.

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