The S&P 500 closed August with gains of more than 2% and set record highs along the way, according to reports from The Stock Trader's Almanac. The Dow Jones Industrial Average added over 1%, while the Nasdaq Composite also posted strong gains. Corporate earnings drove the run, with pre-tax profits reaching $4.8 trillion in the second quarter, the highest share since at least 1950. The S&P 500 closed at a record 7,798.99 on August 13, marking its 27th record close of 2026. Recent data shows the month's biggest S&P 500 gainers include companies from biotech and software to mining and digital assets, reflecting a broader reversal in bearish market narratives that had weighed on these sectors for months.
Moderna leads August S&P 500 gains after reporting promising melanoma vaccine results with Merck, pushing back against doubts that its mRNA platform can deliver another major breakthrough. In enterprise software, Palantir, Veeva Systems, Salesforce, and ServiceNow also rank among the major gainers after earlier selloffs tied to concerns about how durable software demand remains in the AI era. Jim Cramer notes that those software declines were worsened by the presence of Situational Awareness, a highly leveraged fund that had placed large bets against the sector. Palantir's earlier weakness never makes sense given its combination of revenue growth and profitability, while Salesforce rebounds after a strong quarter undercuts fears of a "SaaSpocalypse" and ServiceNow rallies after showing it can fold AI into its existing business. Veeva, which focuses on life sciences, also recovers with the wider software group as fears that AI would disrupt its business prove overblown.
Historical data reveals challenging patterns for both markets entering September. According to The Stock Trader's Almanac, the Dow Jones has fallen an average of 0.8% in September since 1950, while the S&P 500 has shed 0.7% over the same span. The Nasdaq Composite has dropped 0.9% since 1971, and the small-cap Russell 2000 has lost 0.8% since 1979. Bank of America data dating back to 1928 show an average September S&P 500 loss of 1.17%, with the index falling in 56% of those years. Almanac authors Jeffrey Hirsch and Christopher Mistal attribute this pattern to fund behavior after the summer break, noting that "portfolio managers back after Labor Day tend to clean house in September." The calendar test arrives alongside current challenges, with the S&P 500 having risen 2.02% in September 2024 and 3.5% in 2025, back-to-back gains that cut against the long-run average.
Market strategist Tom Lee suggests that September crash fear could flip into a stock rally, with the September 15 Federal Reserve meeting as the critical decision point. Across 10 US midterm election years since 1986, the average stock market low has landed on September 2, following an average slide of 16.77% from the prior high. This year adds a hawkish twist, with three Fed presidents voting for a rate hike in July and Chair Kevin Warsh emphasizing inflation concerns. Lee's base case now expects policymakers to neither hike nor cut rates, stating that "if the Fed doesn't cut, doesn't hike, which is our base case, I think actually the markets could rally very strongly." Should the pullback extend into October, Lee projects the S&P 500 could start above 8,000 with a low near 7,300.
Several pressures now face the strong August performance backdrop, including the United States and Iran exchanging strikes for the first time in over a month and July personal consumption expenditures inflation running at 3.7%, nearly double the Federal Reserve's 2% target. Lee spent August expecting those worries to converge and cost equities roughly 10%, with weak seasonality, hike talk and AI data center backlash all pointing the same way. The calendar test arrives alongside these challenges, with fresh jobs and inflation prints scheduled before the Fed meeting potentially influencing trader expectations about rate policy. Newmont benefits from an emerging recovery in gold prices, though Jim Cramer signals a preference for Agnico Eagle Mines among mining stocks, while outside software, Newmont benefits from an emerging recovery in gold prices, though Cramer says he prefers Agnico Eagle Mines among miners.
