August market patterns

“July market patterns” showed how, over the past couple of decades, July pivoted from being a historically soft month for the US stock market to one of its better performers.

August has essentially gone the other direction over the past 34 years. Overall, it’s been a positive month in 38 of the past 67 years. From 1957-1989, it had the fifth-highest median S&P 500 (SPX) return (1.2%), and was tied for fifth in the number of times it was a positive month (61%). Since then, though, it has the third-worst median return (0.14%) and the second-worst winning percentage (53%).¹

In fact, even though August has been an up month (18 times) more often than a down month (16 times) since 1990, its average return during that span is actually negative, thanks to several larger-than-average losses—specifically, six declines of 5% or more:

In a nutshell, over the past 34 years:

1. August has been a positive month less often.
2. When it was up, it wasn’t up as much as it had been in the past.
3. When it was down, it tended to fall more than it used to.

From 1957-1989, the median positive August return was 3%, while the median negative August return was -2.1%. Since then, the median positive August return is just 2.1%, while the median negative August return ballooned to -3.6%. These basic characteristics have remained fairly consistent during that period.

In terms of how that performance has unfolded throughout the month, market weakness has tended to be concentrated in early August. Six of the first 10 trading days of the month had negative median returns:

The following chart, which shows the percentage of times each day closed higher or lower, reinforces the picture of early-month weakness. Five of the first 10 days of August closed down more often than up, and day 8 was 50-50:

Traders who have been tracking these types of seasonal tendencies know the market has bucked several of its calendar-based performance trends in 2024. For example, June was strong rather than tepid, while July’s return has turned out to be below average. But it’s still worthwhile keeping tabs on these patterns, since understanding what the market tends to do can make it easier to notice when something out of the ordinary is occurring.

Today’s numbers include (all times ET): mortgage applications (7 a.m.), ADP Employment Report (8:15 a.m.), Employment Cost Index (8:30 a.m.), Chicago PMI (9:45 a.m.), Pending Home Sales Index (10 a.m.), EIA Petroleum Status Report (10:30 a.m.), Fed interest rate announcement (2 p.m.).

Today’ earnings include: AutoNation (AN), Boeing (BA), Kraft Heinz (KHC), Verisk Analytics (VRSK), Arm Holdings (ARM), Carvana (CVNA), eBay (EBAY), Exact Sciences (EXAS), Lam Research (LRCX), Meta Platforms (META), Paycom (PAYC), Qualcomm (QCOM), Etsy (ETSY), T-Mobile (TMUS), Q2 (QTWO), Sarepta Therapeutics (SRPT), TransMedics (TMDX), Western Digital Corp (WDC).

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¹ All figures reflect S&P 500 (SPX) monthly and daily closing prices, 1957–2023. Supporting document available upon request. Note: Depending on the year, day 23 in charts 2 and 3 may represent the first or second trading day of September rather than the final trading day of August.