Holiday pause

A choppy August ended on a relatively calm note as the stock market appeared to look ahead to the holiday weekend—and a key week of economic data.

Despite an earnings beat from AI chipmaker Nvidia (NVDA) and more signs of economic stability from weekly jobless claims, GDP, and the PCE Price Index, the market had difficulty gaining traction. Five days of mostly sideways trading left the S&P 500 (SPX) up for the week and month, but only modestly. A robust rally in the final hour of trading on Friday turned a weekly loss into a gain:

The headline: Quiet end to volatile month.

The fine print: Departing from a familiar pattern in recent months, a big move from NVDA didn’t appear to dictate market performance, at least not immediately. The stock fell more than 6% last Thursday despite topping earnings estimates, but for most of the day, the SPX and the Nasdaq 100 (NDX) traded in positive territory—perhaps getting a boost from GDP and weekly jobless claims data suggesting the economy was on stable ground. Friday’s moderate PCE Price Index provided a similarly encouraging picture of inflation.

The scorecard: The Dow Jones Industrial Average (DJIA) was last week’s leader, hitting multiple record highs, including on Friday:

Sector returns: The strongest S&P 500 sectors last week were financials (+2.9%), industrials (+1.7%), and materials (+1.6%). The weakest sectors were information technology (-1.5%), communication services (-0.7%), and consumer discretionary (-0.2%).

Stock movers: Silence Therapeutics (SLN) +13% to $18.29 on Monday, Tempus Ai (TEM) +13% to $68.47 on Tuesday, MongoDB (MDB) +18% to $290.79 on Friday. On the downside, Neurocrine Biosciences (NBIX) -19% to $123.76 on Thursday, Elastic (ESTC) -26% to $76.19 on Friday.

Futures: Another volatile week left October WTI crude oil (CLV4) $1.28 lower at $73.55. Gold hit more than one record high last week, but December gold futures (GCZ4) ended the mostly sideway week nearly $20 lower at $2,527.60. Week’s biggest gains: December oats (ZOZ4) +9%, December hard red wheat (KWZ4) +5.7%. Week’s biggest declines: September ether (ETHU4) -9.2%, September bitcoin (BTCU4) -8.2%.

The economic calendar is packed, but all eyes will be on jobs data:

●Tuesday: S&P Global Manufacturing PMI, ISM Manufacturing Index, Construction Spending
●Wednesday: Trade Balance, Job Openings and Labor Turnover Survey (JOLTS), Factory Orders, Fed Beige Book
●Thursday: Challenger Job Cuts, ADP Employment Change, Productivity and Labor Costs, S&P Global Services PMI, ISM Services Index
●Friday: Employment Report

This week’s earnings include:

●Tuesday: Gitlab (GTLB), HealthEquity (HQY), Zscaler (ZS)
●Wednesday: Dick's Sporting Goods (DKS), Dollar Tree (DLTR), Hormel Foods (HRL), J. Jill (JILL), C3 AI (AI), AeroVironment (AVAV), Casey's General Stores (CASY), Copart (CPRT), Hewlett Packard Enterprise (HPE), Verint Systems (VRNT)
●Thursday: GIII Apparel (GIII), Land’s End (LE), Science Applications (SAIC), Broadcom (AVGO), DocuSign (DOCU), National Beverage (FIZZ), UiPath (PATH), RH (RH), Smartsheet (SMAR)
●Friday: ABM (ABM), Brady (BRC)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Traders exhausted—or energized—by a volatile August may have more of the same to look forward to, if history is any guide. September has been, on average, the weakest month of the year for the SPX since 1957, down 38 times and up 28.¹ Over the past 30 years, positive and negative Septembers have been evenly split, although seven of the past 10—including the past four—have been negative:

As the chart shows, though, larger-than-average September losses have been fairly common since 1994. The average negative September return was -5%, while the average positive September return was +3.4%. Six Septembers had losses in excess of 5%.

Also, more often than not, September has gotten off to a weak start. Since 1957, the SPX’s median four-day return in the shortened week after Labor Day is -0.3%, and the index posted a net decline for this period 35 out of 67 times.

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¹ A figures reflect S&P 500 (SPX) daily closing prices, 1957-2024. Supporting document available upon request.