The last day of trading for August ended with kind of a thud on Monday.
Stocks surrendered most of their gains for the month and the major indices were down from their torrid start, which culminated on August 4th. So, for the majority of the dismal month, stocks were simply churned. The majors remain close to all-time highs, a condition that seems to be tugging at portfolio managers, itching to take profits and wait for another opportunity.
That might not be a bad idea, given recent developments in the Iran war, which appears to be another of the never-ending variety. Over the weekend, US forces struck Iranian missile launchers on Larak Island and Iran responded with missile assaults on U.S. bases in Jordan. Naturally, the price of crude oil bumped higher. WTI futures are inching towards $88/barrel.
Asian and European stocks are down across the board Tuesday morning, prompting a sell-off in U.S. stock futures. At 8:30 am ET, Dow futures were down 360, NASDAQ futures had fallen 378 points, and S&P futures were showing a decline of 52 points.
Sentiment appears to be favoring a continuation of Monday's slack trading. Without any kind of economic data or earnings reports as catalysts, stocks seem to have lost momentum in a big way.
FOMO is being replaced by the fear trade of losing a significant portion of recent gains. That, if anything, was the message from Monday and it seems to have spilled over into September.
Along with the situation in West Asia, rising yields are also a big concern, along with the nagging consensus that the Fed is going to raise the federal funds rate a quarter point at the September 15-16 FOMC meeting. Should the Fed do that, one might as well stick a fork in the latest rally. It will be done. Treasury yields continue to cause concern. The 10-year note is yielding close to recent highs, at 4.73%, with the 30-year also elevated, at 5.27%. Treasury Secretary Scott Bessent's recent forays into the financial order haven't produced much in the way of results, only short-term happy faces. The Japanese Yen has surged back above 160 to the U.S. dollar, once again in the danger zone.
On the opposite side of the argument, Republicans are positioning themselves to retain control of both houses of congress in the midterms, clamping down on cheating, fraud and the over use of mail-in ballots in key battleground states. Democrats are screaming "foul", but nobody seems to be listening, especially the justices at the Supreme Court, which recently sided with the president.
Republicans need a stock market surge heading into the midterms, so maybe the best way to manufacture one is to allow stocks to slide a bit in September, setting up a relief rally that would fit well with their narrative. It would surprise nobody if institutions and large shareholders decided to do some selling during the month of September.
Closer to the situation, the week ahead ends with August Non-farm Payroll data from the BLS, expected to be somewhat subdued. The labor market has yet to feel any ill effects from AI replacing jobs in various industries and it very well may not. Whether AI is the real deal or not, it is still an emerging technology that will require learning and adaptation by humans, not robots, initially, and that appears to be the case presently.
The robots are coming, but it's a slow roll.
At the Close, Monday, August 31, 2026:
Dow: 53,185.90, -374.09 (-0.70%)
NASDAQ: 26,370.89, -31.54 (-0.12%)
S&P 500: 7,686.14, -25.62 (-0.33%)
NYSE Composite: 24,461.95, -123.23 (-0.50%)
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