The market has displayed considerable resilience in August, bucking typical seasonal weakness, despite the continuing Iran war and the lack of any meaningful deal that restores normal shipping through the Strait of Hormuz. After closing at a new all-time high (ATH) twice last week, S&P 500 experienced modest pullbacks earlier this week before rebounding today, August 13, to close at another new ATH. S&P 500 rose 0.65% today, and is now up 4.13% this August, well above its historical full-month average of just 0.04% since 1950.
The market’s ability to advance reflects several supportive forces. Traders and investors have welcomed this week’s relatively subdued inflation data, which has reduced immediate pressure on the Federal Reserve to raise interest rates. July consumer prices (CPI) increased 0.1% month-over-month and 3.4% from a year earlier, while core CPI rose 0.2% monthly and 2.5% annually. Today’s Producer Price Index (PPI) was unchanged on a monthly basis suggesting some additional relief, with wholesale inflation slowing as energy, food, and transportation and warehousing costs declining in July.
However, the favorable inflation readings should not be interpreted as a definitive all-clear signal. Much of the current market optimism is backward-looking, while the economic consequences of the Iran war remain forward-looking. Energy prices fell today, with crude oil declining over 2%, but oil has remained highly volatile as the security of shipments through the Strait of Hormuz still remain in question. Any new disruption could quickly lift gasoline, transportation, manufacturing, and/or logistics costs, potentially reversing some or even all of the recent inflation improvement. This would likely put pressure back on the Fed to hike interest rates.
With valuations elevated and oil markets vulnerable to fresh headlines, market gains may remain fragile. A sustained rally will likely depend on continued evidence that inflation is cooling, energy flows are stabilizing, and the Iran war does not broaden out. Until those conditions become less hazy, the possibility of market volatility returning cannot be ruled out and it may be best to treat S&P 500’s record levels with some degree of caution.
S&P 500 August All-Time Highs — Bullish but Bumpy Signal
An S&P 500 new all-time high during August may seem surprising given the month’s reputation for marking the beginning of the market’s seasonally weak stretch. Yet history suggests that when S&P 500 is strong enough to reach new highs in August, the longer-term outlook tends to improve, even if traders and investors may want to consider being prepared for the return of volatility that often accompanies late summer and early fall in midterm years.
Since 1950, the S&P 500 has recorded one or more new all-time highs (ATH) during August in just 21 years (2026 excluded from the statistics). These years generally arrived after an already impressive first seven months of the year, with S&P 500 up an average of 12.31% through July, more than double the 5.68% average gain for all years since 1950.
Interestingly, August itself has also been stronger following an August breakout. The S&P 500 advanced an average of 1.16% and finished higher 66.7% of the time after making a new ATH in August, compared to an average gain of just 0.04% and a 55.3% win rate across all years. In other words, markets making fresh highs in August have typically been able to build on that momentum rather than immediately reverse.
September, however, remains the weak link. Even after an August ATH, September has averaged a 0.74% decline, although that is only slightly worse than the 0.63% average decline for all years. This suggests that the calendar’s most challenging month retains its reputation regardless of whether the market is coming off record highs or not.
Another notable difference appears over the remainder of the year. After an August ATH, S&P 500 has historically gained 3.01% during the fourth quarter, only modestly below the 4.21% average for all years. But because these strong years have already banked significant gains earlier in the year, the market still finishes August through December up an average of 3.33%, virtually identical to the 3.28% average for all years.
Where the August breakout years truly stand apart is in their annual performance. Full-year gains have averaged an impressive 15.80%, compared to 9.57% across all years since 1950. Even more impressive, the S&P 500 finished the year higher 95.2% of the time after making a new ATH in August versus 73.7% for all years. The only down year was 2018, also a Trump midterm year and a year where the Fed was struggling to find a proper level for interest rates.
That does not mean the ride is smooth. The average maximum drawdown occurring sometime during August through December has been 8.50%, very similar to the 9.49% experienced during all years. History shows that even in strong bull markets, investors may not want to forget that meaningful pullbacks can occur before the end of the year. On average, following new S&P 500 ATH in August, the drawdown tended to begin around mid-September and end in late October.
With the S&P 500 posting multiple new all-time highs in August 2026, history suggests the broader bullish trend remains intact. However, the data also serves as a reminder that record highs do not eliminate seasonal volatility or headline risk fueled by geopolitical events. Strong years have historically stayed strong, but they have rarely done so in a straight line. Watch for DJIA and NASDAQ to back up S&P 500 with new ATHs. The longer it takes for this to transpire, the greater the risk that the market’s August breakout could turn into a fake out that results in a typical seasonal retreat sometime during the remainder of August through early Q4.