The Dow slid 223.82 points, or 0.8%, to 28,430.05 and the S&P 500 dipped 0.2% to close at 3,500.31. The Nasdaq Composite outperformed with a 0.7% gain and ended the day at 11,775.46.
Declines in bank stocks pressured both the Dow and S&P 500. JPMorgan Chase, Citigroup, Bank of America and Wells Fargo were all down more than 2%, following Treasury yields lower. Yields fell after Federal Reserve Vice Chairman Richard Clarida said rates won't go up just because unemployment goes down.
Meanwhile, the Nasdaq got a lift after two big stock splits took effect Monday. Apple shares gained 3.4% as a 4-for-1 split took effect. Tesla shares added 12.6% following its 5-for-1 split.
The Dow rallied 7.6% this month for its biggest August gain since 1984. The S&P 500 rose 7% month to date for its best August performance since 1986.
The S&P 500 also notched its fifth consecutive monthly advance. Since 1950, there have only been 26 instances in which the broader market index has risen for five straight months, according to data from Suntrust/Truist Advisory. In 96% of those occasions, the S&P 500 has sported a gain a year after the streak.
"However, it is notable that after such strong monthly winning streaks, near-term stock returns tend to moderate as one would expect," said Keith Lerner, the firm's chief market strategist, in a note.
This month's gains have pushed the S&P 500 to record levels, officially confirming a new bull market has started. The August rally built on the market's sharp rebound off the March 23 lows. Since then, the Dow and S&P 500 are up 55.7% and 59.4%, respectively.
We "had hoped that the market would consolidate its gains since March 23, giving earnings a chance to rebound," said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note. "However, Fed officials continue to drive up stock prices by committing to keeping interest rates close to zero for a very long time … Consequently, they are fueling the meltup in stock prices."
Earlier this year, the Federal Reserve cut rates to zero and launched an open-ended asset-purchasing program to support the economy through the coronavirus pandemic. Last week, the central bank laid out an inflation policy framework that would keep rates lower for longer.
In an apparent long-term bet on the global economy, Warren Buffett announced Sunday that his Berkshire Hathaway conglomerate had acquired stakes of more than 5% in Japan's five-leading trading companies. Those companies are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. The five businesses import everything from metals to food into Japan and provide services to manufacturers.
The Dow kicked off the week with three new constituents and with Apple having a much smaller influence on the 30-stock average.
At Monday's open, Salesforce, Amgen and Honeywell were included in the Dow, replacing longtime components Exxon Mobil, Pfizer and Raytheon Technologies.
Traders also looked ahead to Friday, when the latest U.S. jobs report is set for release. Economists polled by Dow Jones forecast that 1.255 million jobs were created in August.
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