Stock Splits End A Big August

By Nicholas Jasinski |  Monday, August 31 Soaring Summer. August closed with just the fifth down day for the S&P 500 all month. The index slipped 0.2%, to end the month up 7%. It's now 56% higher than its late-March low, and up almost 20% over the past year. The Nasdaq Composite rose 0.7% today, to a record high close. It added almost 10% in August. The newly reshuffled Dow Jones Industrial Average fell 0.8% today, to close the month up 7.6%. To state the obvious, those are all stellar monthly returns. The S&P 500 and Dow delivered their best August since 1984, while the Nasdaq's was its best since 2000. Using history as a guide, September has tended to be one of the weakest months of the year. Here's Al Root today: Following a big August, with gains more than 5%, Barron’s found that the Dow drops almost 80% of the time in September. The numbers for the S&P and Nasdaq are about 60% and 55%. September isn’t a great month for stocks to begin with. The Dow, for instance, has dropped about 1% on average in September looking all the way back to 1896—124 years ago. September, seasonally speaking, is the worst month of the year. At least, the average September drop—after a big August gain—is smaller than the overall average. After a big August, the average September drop for the Dow and S&P is 0.4% and 0.5%, respectively. Only the Nasdaq’s average September decline following a fantastic August is bigger than average at about 1.4%. There seems to be more than the usual dose of potential market-moving developments on the horizon. For starters, the U.S. presidential election tends to come into focus after Labor Day, with the political newsflow picking up even more. Which parties appear likely to control the White House or Congress can affect the fortunes of several sectors.  Legislators in Washington, meanwhile, continue to work on a second Cares Act. Another factor for investors to watch in September are the return-to-school experiments across the U.S. They'll either show educational institutions' ability to keep the spread of coronavirus under control on campuses, or their failure, forcing them  to send students home. Both scenarios have implications for the pace of the continuing economic recovery. The path of least resistance for stocks has consistently been higher in August, helped not insignificantly by the tailwind of expansive monetary policy. That looks to remain the case in September, but some additional tremors could lie ahead.

DJIA: -0.78% to 28,430.05 S&P 500: -0.22% to 3,500.31 Nasdaq: +0.68% to 11,775.46 The Hot Stock: Alexion Pharmaceuticals +6.8% The Biggest Loser: HollyFrontier -7.5% Best Sector: Utilities +0.3% Worst Sector: Energy -2.2%