The advice for fund investors is, of course, to maintain a long-term view. It is unlikely that the stock market—and accordingly, the average stock fund—will be able to post a gain for all of 2022. Meantime, the market’s movements will be all about the Fed and inflation.

The S&P 500 and Dow Jones Industrial Average both fell just over 4% in August, mainly because of the end-of-month declines tied to the Fed; the Nasdaq Composite Index fell closer to 5%.

“Inflation is a bit like the bogeyman from horror movies—persistent and resilient,” says

Katie Nixon,

chief investment officer for Northern Trust Wealth Management. In her latest market commentary, Ms. Nixon says that Mr. Powell’s comments affirmed her belief that the Fed will likely stay aggressive into 2023, potentially raising its federal-funds rate by an additional 0.75 percentage point in the September meeting.

Scoreboard

August 2022 fund performance,
total return by fund type.

“The current policy path is aimed squarely at fighting inflation,” says Ms. Nixon. “Collateral but necessary damage will be done to the economy and potentially manifest as pain to households and businesses.”

International-stock funds fell 5.3% during August, on average, to push their year-to-date decline to 21.5%.

Bond funds also declined in August. Funds tied to intermediate-maturity, investment-grade debt (the most common type of fixed-income fund) fell 2.6% and are down just over 11% for 2022 so far.

Mr. Power is a Wall Street Journal features editor in South Brunswick, N.J. Email him at william.power@wsj.com.