Bumpy finish still give stocks an August gain
Stocks ended lower on Wall Street’s Monday, but the market still closed out August with its fifth monthly gain in a row.
The S&P 500 fell 0.2% after spending much of the day wavering between gains and losses of less than 0.1%. The modest decline, which snapped the index’s sevenday winning streak, came as losses in financial, industrial and energy companies outweighed gains in technology stocks.
The benchmark index finished the month with a 7% gain, making it the S&P 500’s best August since 1986. The Nasdaq composite, meanwhile, added to its recent string of milestones, closing at an all-time high.
The market’s latest strong monthly finish extends a remarkable comeback for Wall Street since the coronavirus pandemic knocked financial markets into a steep skid and the global economy into recession.
Encouraging economic data as broad swaths of the economy have reopened this summer have helped stoke investor optimism about a recovery. The question is whether that’s going to be enough to keep the market moving higher when so much uncertainty remains about the pandemic’s lasting impact on companies and consumers.
“People need to be careful here because what we have is an exuberant rally sitting on the foundation of a shaky recovery,” said David Kelly, chief global strategist at JPMorgan Funds. He added that there will likely be a market correction “that brings us back down to Earth.”
The S&P 500 fell 7.70 points to 3,500.31. The Dow Jones Industrial Average lost 223.82 points, or 0.8%, to 28,430.05.
The Nasdaq rose 79.82 points, or 0.7%, to 11,775.46. The index, heavily weighted with tech stocks, has led the market’s rebound this year. It finished August with a 9.6% gain and it’s up 31.2% for the year. The Russell 2000 index of small company stocks fell 16.47 points, or 1%, to 1,561.88.
Low interest rates and massive amounts of bond purchases by the Federal Reserve have helped prop up the economy, and they’re a central reason the S&P 500 has been able to recover from its nearly 34% plunge earlier this year, even though the pandemic is still raging.