On Wall Street, the Dow Jones records its best August since 1984

US STOCKS-S&P 500, Nasdaq hit new highs as Salesforce fuels tech rally
August 27, 2020
Dow erases earlier gains and falls 350 points as tech sells off again, Nasdaq drops 3%
September 4, 2020

On Wall Street, the Dow Jones records its best August since 1984

The New York Stock Exchange ended on a mixed note Monday the best August since 1984 for the Dow Jones and since 1986 for the S&P 500.

Its flagship index fell 0.78% to end at 28,430.05 points. But a few days after returning to its level at the start of the year, it is up 7.6% over the month.

The broader S&P 500 index fell 0.22% to 3,500.31 points, but rose 7% over the month. It had returned in mid-August to a level never reached before, thus completely erasing the losses suffered by the index at the start of the spread of the pandemic in the United States.

The Nasdaq rose 0.68% to 11,775.46 points, setting a new record.

The day’s evolution of the indices is above all due to “the flow of the market” in the absence of major information and many traders, according to Art Hogan of National Holdings.

The meeting was especially marked by the implementation of a big stir within the Dow Jones: the groups ExxonMobil (-1.84%), Pfizer (-0.32%) and Raytheon Technologies (-0, 99%) have indeed officially come out to be replaced by Salesforce (+ 0.57%), Amgen (+ 0.08%) and Honeywell (-1.68%).

Apple (+ 3.39%) also saw the price of its share divided by four, and Tesla (+ 12.57%) by five.

These operations do not change the market value of these companies but are supposed to make their securities more accessible to small shareholders by lowering their unit price.

“Although the changes are only cosmetic, history shows that retail investors often use stock splits as opportunities to access popular names that were previously too expensive for them,” notes JJ Kinahan of TD Ameritrade . “If that happens, it could help boost the progression of mega-capitalizations,” he adds.

The latter being above all the star stocks of technology, this tends to boost the Nasdaq against the Dow Jones and the S&P 500.

– “Traditionally complicated September” –

But the three indices benefit from the gradual recovery of the economy and the fall in unemployment in the United States, a particularly accommodating monetary policy and the hope of the imminent arrival on the market of vaccines against the Covid- 19.

The market “is now entering a month which is traditionally a little complicated,” said Peter Cardillo of Spartan Capital Securities.

“But with an American central bank which remains largely on the side of the equity market, we will probably avoid any major downturn,” he says.

The Fed, which has already injected trillions of dollars into the financial circuit since the start of the pandemic, announced last week that it could in the future let inflation temporarily slide above the 2 % before acting on rates, thus suggesting that they would remain at a low level for a long time.

Among the other values ​​of the day, the airline United Airlines (-3.59%) decided to abandon the costs of modifying plane tickets, a measure intended to attract a few more passengers while air transport is particularly affected by the pandemic.

The Berkshire Hathaway holding of famous American investor Warren Buffett fell 0.23%. It announced Monday that it had exceeded the threshold of 5% of the capital in five major Japanese trading houses, and retains the possibility of rising to 9.9% in each of them.

US allergy specialist Aimmune Therapeutics jumped 172% as Swiss food giant Nestle plans to launch a takeover bid to acquire the company at a price valuing it at $ 2.6 billion.

On the bond market, the 10-year rate on US debt fell to 0.7031% against 0.7211% Friday night.