The stock market ended the week with dramatic losses, illustrating increasing jitters over the direction of the economy and the approaching tariffs. The S&P 500 was down 2.4% — its biggest weekly loss since the one ending May 23. At the same time, the Dow Jones Industrial Average plunged 2.9%, its biggest decline since April 4. Even the tech-heavy Nasdaq Composite joined the sell-off, closing down 2.2% on the day.
As it turns out, August has often been a difficult month for the markets. Data going all the way back to 1988 indicates it’s the worst month for the Dow Jones Industrial Average. In this window, the S&P 500 and Nasdaq Composite both crater. Photo by Jonn Leffmann on Unsplash As the Stock Trader’s Almanac points out, August is their second worst month. Market analysts were already preparing for a disappointing showing, as recent news has heightened fears that are already bubbling to the surface.
The DJIA decline came on the heels of a disappointing July jobs report that fueled investor anxiety. Furthermore, jitters over President Donald Trump’s newly amended tariff rates helped fuel the sell-off. As tariffs enter the political debate and market strategy, traders are rethinking their market roles amid the tariffs’ possible economic fallout.
Oil prices were under further pressure on Friday, mostly owing to greater strength in the U.S. dollar. Brent crude was closing near $70 a barrel. That’s a huge rebound from its trough of around $58 in April 2023. Speculation that OPEC+ would hike its crude oil production in even larger amounts weighed heavily on bearish sentiments in the market. OPEC+ has agreed to raise production by 547,000 barrels per day starting in September, part of ongoing efforts to regain market share following previous cuts.
Worries remain over future supply interruptions tied to geopolitical conflicts, especially in light of tensions with Russia. Traders have pushed back their expectations for an interest rate cut to September. This change in expectation follows policymakers’ decision to leave their benchmark overnight borrowing rate unchanged for the fifth straight meeting.
Amidst these developments, industry expert Amrita Sen remarked on the situation:
“Given fairly strong oil prices at around $70, it does give OPEC+ some confidence about market fundamentals.” – Amrita Sen