U.S. stock markets closed mostly lower on Monday as investors booked profit after a week-long rally. Absence of any major news also kept market participants sidelined in the last trading day of August. Meanwhile, Wall Street completed best August in more than three decades as all three major stock indexes rallied strongly in the month.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 0.8% or 223.82 points to close at 28,430.05, breaking its three-day winning streak. Notably, 23 components of the 30-stock index ended in the red while 7 finished in green. The blue-chip index once again entered into negative territory year to date.
The S&P 500 fell 0.2% to end at 3,500.31, reversing a seven-day winning streak. In the intra-day session, the broad-market index recorded an all-time high of 3,514.77. The Energy Select Sector SPDR (XLE), the Materials Select Sector SPDR (XLB), the Industrials Select Sector SPDR (XLI) and the Financials Select Sector SPDR (XLF) declined 2.2%, 1.5%, 1.2% and 1.2%, respectively. Notably, eight out of eleven sectors of the benchmark index closed in negative territory while three in positive territory.
However, the tech-laden Nasdaq Composite ended in positive territory to close at 11,775.46, increasing 0.7%. This marked its 41st closing high this year so far. In the intra-day session, the tech-heavy index recorded an all-time high of 11,829.84.
The fear-gauge CBOE Volatility Index (VIX) jumped 15% to 26.41. A total of 9.4 billion shares were traded on Monday, higher than the last 20-session average of 9.18 billion. Decliners outnumbered advancers on the NYSE by a 2.02-to-1 ratio. On Nasdaq, a 1.64-to-1 ratio favored declining issues.
Dow Gets a New Look
In a major shake-up, the 30-stock index will got a new look as three incumbent stocks was replaced by three new comers effective Aug 31, before the opening bell. As per the restructuring, Pfizer Inc. PFE, Raytheon Technologies Corp. RTX and Exxon Mobil Corp. XOM was replaced by salesforce.com inc. CRM, Honeywell International Inc. HON and Amgen Inc. AMGN.
According to the S&P Dow Jones Indices, the restructuring was necessary after Apple Inc.'s AAPL decision of a 4-to-1 stock split. Since the Dow is a price-weighted index, the stock split will reduce the blue-chip index's exposure to the high-growth technology sector. The position of Apple in the Dow hierarchy has declined from the first to 17th spot after the stock split.
Apple and salesforce sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Historically, Wall Street remained muted in August. However, this year, the three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – surged 7.6%, 7% and 9.6%, respectively. This was the best August for the Dow since 1984 and for the S&P 500 since 1986. The Nasdaq Composite booked its best monthly performance since 2000.
In this month, the S&P 500 entered in positive territory year to date. On Aug 18, the broad-market index recorded a new all-time high since Feb 19, erasing all coronavirus-led losses. The benchmark also crossed 3,500 level for the first time.
The Nasdaq Composite crossed the landmark 11,000 mark in August. The Dow became green year to date on Aug 28 for the first time since Feb 21. However, it dropped slightly and entered in red zone on Aug 31.
Clinical trial advances for treatments of COVID-19, Fed's newly adopted ultra-accommodative average inflation targeting policy, expectations for a fresh trench of fiscal stimulus, solid economic data and better-than-expected second-quarter GDP and corporate earnings boosted investors' confidence in risky assets like equities.
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Exxon Mobil Corporation (XOM): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Pfizer Inc. (PFE): Free Stock Analysis Report
Honeywell International Inc. (HON): Free Stock Analysis Report
salesforce.com, inc. (CRM): Free Stock Analysis Report
Amgen Inc. (AMGN): Free Stock Analysis Report
Raytheon Technologies Corporation (RTX): Free Stock Analysis Report
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