NEW YORK (TheStreet) -- August may be over but the volatility that marred the month's trading is unlikely to subside as investors remain concerned about the health of China's economy and uncertain whether the Federal Reserve plans to raise interest rates next month or further down the road.
Stocks closed sharply lower on Monday as benchmark indexes finished with their worst monthly losses since May 2012. The S&P 500 ended with a monthly loss of 6.3% while the Dow Jones Industrial Average fell 6.6% and the Nasdaq lost 6.9%.
Fears that China's stock market will continue to stumble intensified after a report that China's government won't make additional large stock purchases to prop up its market, according to The Financial Times. Over the past two months, China's government-owned investment funds and private institutions have invested $200 billion to support its equity markets. The Shanghai Composite dropped nearly 1% on Monday.
Meanwhile, the Fed's annual meeting in Jackson Hole concluded with few clues about a rate hike timeline.
"The key takeaway from the Jackson Hole symposium over the weekend was that FOMC members remained unwilling to telegraph any decision on the timing of the first rate hike," said Gennadiy Goldberg, U.S. strategist at TD Securities. "A cacophony of voices continued to hint that a 2015 hike could still remain in play, but the defense of earlier rate hikes was peppered with subjectivity as the inflation outlook remained stuck in the mud."
On Friday, Fed Vice Chairman Stanley Fischer kept noncommittal on when an interest rate hike could occur, but didn't rule out September.
Fischer noted to CNBC that "there was a pretty strong case" for a September hike but couldn't commit given there is still "a little over two weeks before we make a decision."
"We've got time to wait and see the incoming data and see what is going on now in the economy," he added.
The jobs report for August, to be released on Friday, will be crucial to any decision in September on rates Economists expect 223,000 jobs to have been added to nonfarm payrolls in the U.S. over the month compared to 215,000 jobs added in July. The unemployment rate is forecast to fall to 5.2% from 5.3%.
The commodity market had a killer day even as equities fell. Crude oil surged on new data that showed U.S. crude production at a lower-than-expected rate. Estimates for U.S. production over the first five months of 2015 have been lowered by between 40,000 and 130,000 barrels a day each month, according to the Energy Information Administration.
West Texas Intermediate crude rose 8.8% on Monday to $49.20 a barrel and added 4.4% over August. The Energy Select Sector SPDR ETF (XLE) gained 1%.
Gold closed 0.1% lower to $1,132.50 an ounce, its fifth loss in six sessions, but closed out the month with its biggest gain since January. The commodity has been viewed as a safe-haven asset as equities experienced extreme volatility.
Apple (AAPL - Get Report) and Cisco (CSCO - Get Report) shares were on watch after the companies agreed to partner in a deal which helps Apple move further into the enterprise market. As part of the collaboration, Apple devices will work more effectively on corporate networks utilizing Cisco technology.
Phillips 66 (PSX - Get Report) jumped more than 2% after Warren Buffett's Berkshire Hathaway (BRK.A - Get Report) disclosed a new $4.5 billion stake. Berkshire now holds around 58 million shares, or more than 10% of shares outstanding.
Twitter (TWTR) added more than 3% after SunTrust analyst Robert Peck upgraded to "buy" from "neutral," noting that at current prices the company has an attractive valuation.
Amicus Therapeutics (FOLD) fell 3.3% after agreeing to buy privately held Scioderm for $229 million in a cash-and-stock deal. Scioderm specializes in rare diseases and its current lead drug candidate, Zorblista, treats a blistering skin condition that targets newborns.