Stocks drifted higher this week. Nothing dramatic. The S&P added 0.5%, the Nasdaq led with a 0.9% gain, and the Dow matched the S&P at 0.5%. Small caps were the outlier, with the Russell 2000 down 1.5% while everything else in equities moved up.
Outside of stocks, the story was more interesting. Oil dropped 4.2% on the week. Gold fell 2.6%. Bitcoin slipped 1.5%. The 10-year ticked down slightly to 4.72%. Risk-off in commodities, risk-on in large-cap equities. Not the pairing you’d expect.
Market Recap
Weekly Heat Map of Stocks
Sentiment Check
The bears have now outnumbered bulls for six straight weeks. This is the highest level in 11 weeks. That’s despite the S&P 500 continuing to make new all-time highs during that period.
Global Equity ETFs
Looking to September
Bad news for the bears. We’re set to close out August with a double-digit YTD gain. That’s only happened 20 times since 1950. And history says it’s not the setup people think it is.
In every one of those 20 years, only one time did the S&P see a double-digit drawdown the rest of the year. One time out of twenty.
Now let’s talk about September specifically, because I know that’s the month everyone loves to be scared of.
Turns out the worst Septembers on record almost always had a tell. Nine of the ten worst Septembers ever came into the month with the S&P already negative YTD. We’re not negative. We’re up double digits.
Flip it around and the pattern holds. The best Septembers tend to walk in with strength already behind them, not weakness. And five of the best Septembers on record happened during midterm years. Which is exactly where we are right now.
None of this means smooth sailing though. Seasonally, volatility tends to pick up right about now, and this year hasn't given us much of it yet. The setup for a flare-up is there. Fed decisions, Jackson Hole, bond yields, geopolitics, midterms, or something nobody's even talking about yet. The good news buried in that seasonal script is simple. Even when the fall gets bumpy, seasonality typically turns positive again heading into year-end.
And if we do get some chop, there's a decent argument it won't be as bad as past pullbacks. Since the tariff crash in early 2025, every dip along the way has been shallower than the one before it, almost cutting the prior drawdown roughly in half each time. We're sitting less than 1% off new all-time highs right now, so even a correction from here starts from a position of strength.
Put it together and September looks less scary than the calendar makes it feel. Strong YTD gains, a midterm year, and a market that's been healing its own drawdowns faster each time it dips.