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August has been a dangerous month for the market

August is the worst DJIA, S&P 500, Russell 1000 and Russell 2000 month over the last 33 years, 1988-2020 with average declines ranging from 0.4% by Russell 2000 to 0.8% by DJIA. For NASDAQ August ranks second worst over the same period with an average gain of 0.2%.

Contributing to this poor performance since 1987; the second shortest bear market in history (45 days) caused by turmoil in Russia, the Asian currency crisis and the Long-Term Capital Management hedge fund debacle ending August 31, 1998 with the DJIA shedding 6.4% that day. DJIA dropped a record 1344.22 points for the month, off 15.1%—which is the second worst monthly percentage DJIA loss since 1950. Saddam Hussein triggered a 10.0% slide in August 1990. Sizeable losses in 2010, 2011, 2013 and 2015 of over 4% on DJIA have widened Augusts’ average decline.

In post-election years, Augusts’ rankings are little changed. August is the worst month for DJIA and Russell 1000 and second worst for S&P 500, NASDAQ and Russell 2000. Average declines in post-election year Augusts swell to 0.8% by Russell 2000 to 1.7% by DJIA. Each index has also seen more declining post-election year Augusts than positive.

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