The S&P 500 is up 7.2% since the month, putting the broader market index on track for its biggest August gain since 1984. The Dow Jones is up more than 8% this month here and is also heading for its best August in 36 years.
This month’s gains have pushed the S&P 500 to record highs, officially confirming the start of a new bull market. The Dow, meanwhile, erased its 2020 losses on Friday, ending the session with a gain of 0.4% year-to-date.
The August rally built on the market’s sharp rebound from the intraday lows of March 23. Since then, the Dow and the S&P 500 are up 57% and 60.1%, respectively.
We “had been hoping that the market would consolidate its gains from March 23, giving earnings a chance to rebound,” Ed Yardeni, president and chief investment strategist at Yardeni Research, said in a note. “However, Fed officials continue to drive up stock prices by pledging to keep interest rates close to zero for a very long time… As a result, they are fueling the stock price meltdown. ”
Earlier this year, the Federal Reserve cut rates to zero and launched a perpetual asset purchase program to support the economy during the coronavirus pandemic. Last week, the central bank presented an inflation policy framework that would keep rates lower for longer.
New Dow Look
The Dow will kick off the week with three new constituents and with Apple having a much weaker influence on the 30 stock average.
As of Monday’s opening, Salesforce, Amgen and Honeywell will be included in the Dow, replacing long-standing components Exxon Mobil, Pfizer and Raytheon Technologies. A 4-to-1 split in Apple shares will also go into effect on Monday.
Traders will also expect Friday, when the latest US employment report is released. Economists polled by Dow Jones predict that 1.255 million jobs were created in August.
To subscribe to CNBC PRO for exclusive news and analysis, and live business day programming from around the world.