- The S&P 500® was up 7.01% in August, bringing its YTD return to 8.34%.
- The Dow Jones Industrial Average® gained 7.57% for the month and was down 0.38% YTD.
- The S&P MidCap 400® increased 3.36% for the month and was down 6.62% YTD.
- The S&P SmallCap 600® returned 3.86% in August and -11.99% YTD.
It wasn’t a perfect month, but with the S&P 500’s 7.01% gain, some may label it as such given it was the best August since 1986’s 7.12%. However, the last week of the month (up 3.64%) was a perfect week—five consecutive days of new closing highs (3,508.01; an event not seen since Oct. 16-20, 2017, and March 16-20, 1998, before that), and a new intraday high (3,514.77, set on the last day of the month). On the way to these highs, the index passed (and closed above) the 3,400 and 3,500 levels for the first time. Year-to-date, it posted 20 new closing highs, and it has posted 144 since the U.S. November 2016 election, with 64 days left until the next election date. The impressive run up since the March 23, 2020, low (56.45%, 176% annualized) has astonished professional money managers, as they seek to justify the optimism that has the index selling at a 21.3 P/E based on 2021 earnings (a value that would be considered high, if it were based on the current 12-month earnings, much less discounted 16 months into the future). What gives with the current version of “irrational exuberance” is the market’s optimism over COVID-19, that it will be tamed, if not cured (treatment if not a cure, easy and inexpensive testing, and moving it out of the death column and into a bad two weeks penalty box). I should note that when the Maestro used that term on Dec. 5, 1996, the index was up 21.0% YTD and selling at a trailing 12-month P/E of 18, compared with 28 today; of course, the index did go up another 105% until the March 24, 2000, high (from 745 to 1,527).