On the last trading day in August, Dow and the broader stock market logged their second worst month of the year. Shares were finished blending Friday, giving up gains after opening higher.
Dow ( INDU ) closed up 41 points, or 0.2% higher. For the month, the index is down 1.7%. S&P 500 ( SPX ) and Nasdaq Composite ( COMP ) is down 0.1% and 0, 5% respectively.
Dow and S&P are still on track to record their best weekly winnings since early June, and it is shaping up to be the best week of 1
0 for the Nasdaq.
Optimism that trades tensions between the United States and China may also make it easier for the market to move higher this week.
The key to the market will be if profits can last beyond September.
Stocks logged their second worst month of the year – only May was worse. Dow slipped 1.7%, while S&P was down 1.8%. The Nasdaq plunged 2.6%, according to Refinitive.
May and August have been the only negative months for stocks in 2019.
August is usually considered a quiet month for the market, but this has not kept up late.
Trade tariffs, retaliation, harsh rhetoric and warnings of recession flashing from the bond market were questions that dominated the market this month.
President Donald Trump threatened another 10% of US $ 300 billion of Chinese import duties on the first day of trading in August, leading Dow to its biggest intraday swing of the year. These tariffs will also hit consumer goods such as toys and iPhones, a concern given that the braking US economy is being kept alive by strong consumer spending.
As trade tensions escalated, concerns also about a currency war, especially after the Chinese government devalued its yuan to fall below the 7-to-1 ratio against the US dollar for the first time in ten years.
On the back of this, August 14 became the worst day of the year for shares, with the Dow plummeting 800 points.
Investor concerns helped higher safe haven assets such as gold and treasury.
Gold prices rose to a six-year high. The 30-year US Treasury yield fell to its lowest level on record this month, while the 10-year yield fell to a three-year low. Yields and prices move in opposite directions.
The US yield curve was reversed on several occasions in August and flashed with a warning sign for the recession. Investment in the yield curve has often preceded the recession in the past and is a sign that investors are nervous about the immediate future of the economy.
Meanwhile, Trump's criticism of Federal Reserve Chairman Jerome Powell continued throughout the month. At one point, the president tweeted "my only question is who is our bigger enemy, Jay Powell or Chairman Xi," referring to Chinese President Xi Jinping.
Friday, Trump buzzed Powell again, tweeting
"Euro drops against the dollar" like crazy ", giving them a huge export and production advantage … and the Fed does nothing!" The United States has a Fed problem, not a tariff problem, Trump continued
The euro traded down 0.6% against the US dollar on Friday. For the year, the shared eurozone currency is 4.2% against greenback, according to Refinitiv.
Powell stuck to his guns at the Fed's annual meeting in Jackson Hole on August 23, acknowledging the risk of a financial slowdown in the non-states without suggesting whether the central bank would cut rates again in September.
Expectations of a percentage point cut at the September 18 meeting are about 96%, according to CME's FedWatch tool.