The S&P 500 slipped 0.33% on Monday as renewed U.S.-Iran strikes and rising Treasury yields weighed on stocks, but the index still closed out August with a 2.6% monthly gain. Strategists say the S&P 500's position above its 200-day moving average gives it a historically better shot at avoiding September's usual seasonal slide.
The S&P 500 fell 0.33% to 7,686.14 on Monday. The Dow Jones Industrial Average slid 374.09 points, or 0.7%, to 53,185.90, while the Nasdaq Composite eased 0.12% to 26,370.89. The pullback came after the U.S. and Iran traded fire for the first time in a month, with U.S. Central Command confirming strikes on two rocket launchers on Iran's Larak Island.
Oil prices jumped on the renewed hostilities, with U.S. WTI crude settling up 2.83% at $85.76 a barrel and Brent crude rising 2.71% to $90.49. Longer-dated Treasury yields also climbed alongside oil, adding to the downbeat mood in equities.
Despite the Monday retreat, the S&P 500 still closed August 2.6% higher, its first monthly gain since May. The Dow notched its fifth straight monthly advance, and both indexes had touched all-time highs earlier in the month.
September looms, but the setup looks different
September has historically been the S&P 500's weakest month, with an average decline of 1.1% since 1928, according to Dow Jones Market Data. However, Oppenheimer & Co. found that September's worst losses tend to hit when the index starts the month below its 200-day moving average — which is not the case now.
The S&P 500 ended Monday well above that average, which stood at 7,122.92. Since 1950, the index has averaged a 0.2% September gain when starting above that level, versus a 3% average loss when starting below it, Oppenheimer found. The S&P 500 is up 12.3% for the year and sits just 1.4% below its Aug. 13 record close.
Treasury yields add to the pressure
The 10-year Treasury yield climbed above 4.757% on Monday, its highest level since Jan. 14, 2025, as the Iran conflict intensified. According to MarketWatch, Robert Pavlik, senior portfolio manager at Dakota Wealth Management, said: "people really start to sit up and take notice", adding that concerns build toward a possible run at 5%.
Rising yields raise the cost of capital just as the interest rate backdrop stays in focus for investors watching Friday's August jobs report. Still, Oppenheimer's Ari Wald said the technical setup shows no major breakdown in the bull market, with room for a fourth-quarter rally into 2027.
Sources: CNBC, MarketWatch, MarketWatch
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