Market Indexes Slip to Close Out a Winning, Turbulent August
Key Points
The Dow fell 0.56%, the S&P 500 slipped 0.43%, and the Nasdaq Composite dropped 0.34% after the U.S. and Iran traded strikes.
Tesla climbed 5.2% on a Model 3 price cut, the biggest positive contributor to the S&P 500 and Nasdaq.
Despite Monday's decline, the Dow rose 1.4% in August for its fifth straight monthly gain.
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August is ending the same way it spent much of the month: with the Iran war rattling the oil market. The U.S. and Iran traded strikes over the weekend for the first time in several weeks, crude oil prices jumped, and stocks slipped. Stop me if you've heard this before. Yet for all the drama, the market is still finishing August in the green.
The Dow Jones Industrial Average (DJINDICES: ^DJI) is down 0.56% as of 12:10 p.m. ET, roughly 315 points. The S&P 500 (SNPINDEX: ^GSPC) has slipped 0.43%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) index is down by 0.34%. Twenty-three of the Dow's 30 components fell this morning.
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^DJI data by YCharts
Oil climbs as the Iran war reignites
Today's catalyst is geopolitical. U.S. forces hit two Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday, the first acknowledged strike on Iranian soil since late July. Iran fired back at two American bases in Jordan. Oil did what it does when the Strait of Hormuz is making headlines: Brent crude prices jumped about 2.8% back above $90 a barrel, and the United States Oil Fund (NYSEMKT: USO) fund rose 2.5%.
Energy stocks rose 0.9%, while all other sectors posted declines. The individual gains were modest, but more than two-thirds of all energy stocks rose.
Most of the price drops in other industries were also rather small. I don't see a single Dow member moving more than 2.4% in either direction, leaving the elite index's score in the hands of the heaviest weights. Goldman Sachs (NYSE: GS) and Caterpillar (NYSE: CAT) did the most damage, each off by about 1%. The same story led the S&P 500 and the Nasdaq lower, too. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) was the largest score-changer there with a 2.3% price drop.
The bright spot was Tesla (NASDAQ: TSLA), up 5.2%, which is the only reason the Nasdaq isn't falling harder. The catalyst was, oddly, a price cut: Tesla trimmed the entry-level Model 3 in Hong Kong and Macau by about 8.5%. Cheaper cars aren't usually a reason to buy the stock, but investors read it as Tesla defending demand in a competitive market.
Image source: Getty Images.
A wild August still finished in the green
That's the end of August. It was a messy month on Wall Street, but it still worked out. The Dow is up 1.4% for the month, its fifth straight monthly gain. The S&P 500 and Nasdaq are headed for their first up months since May, 2.4% and 3.5% higher, respectively. Both the S&P and Dow hit record highs along the way, while the Nasdaq Composite fell just short of the record from early June. Tech did the heavy lifting all around.
And it managed all that with a six-month war keeping oil prices high, inflation driving Treasury yields sky-high, and a new Fed chair openly worried about prices. None of those problems went away; the market climbed anyway, because earnings kept growing.
The next test comes fast: Friday's August jobs report will help decide whether the Fed hikes or holds on Sept. 16. See you on the other side of the calendar page.
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Anders Bylund has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Caterpillar, Goldman Sachs Group, and Tesla. The Motley Fool has a disclosure policy.
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