MW A record-setting July for stocks gave way to rough start to August-investors may not be ready for what comes next

By William Watts

The 'dog days' of summer were evident throughout July, a month marked by low volatility. That ended abruptly to start August.

Boring can be bullish. Unfortunately, August kicked off Friday with plenty of excitement.

Investors went the entire month of July without the S&P 500 SPX posting a single daily move of more than 1% in either direction. In an illustration of the Wall Street adage, "never short a dull market," the large-cap benchmark delivered 10 record finishes, the most since it saw 12 records in August 2021.

"Maybe that was boring but I think people liked it," quipped Thomas Martin, senior portfolio manager at Atlanta-based Globalt, in a phone interview.

That changed with the flip of the calendar on Friday. The S&P 500 fell 1.6%, after President Donald Trump's latest tariff salvo and a weaker-than-expected July jobs report that saw just 73,000 added to payrolls last month, and big downward revisions to May and June figures that showed the labor market was weaker than previously believed.

If that wasn't enough, Trump said in a social-media post that he had ordered two nuclear submarines repositioned in response to threats made online by Dmitry Medvedev, Russia's former president. He also announced a plan to fire the head of Bureau of Labor Statistics after the disappointing jobs figures-an alarming signal to economists and other market participants worried about the credibility of U.S. economic data.

The S&P 500's drop was its biggest since April 21. The Dow Jones Industrial Average DJIA slumped 542.40 points, or 1.2%, while the Nasdaq Composite Index COMP shed 2.2%.

"The 'dog days' of summer were evident throughout most of July, a month marked by low volatility in every sense. The S&P 500 went the entire month without a single 1% gain or loss - a phenomenon we last saw in December 2019," said technical analyst Frank Cappalleri on Substack.

The Cboe Volatility Index VIX, an options-derived measure of expected volatility inn the S&P 500 over the next 30 days, fell below 15 earlier this week - well below its long-run average just shy of 20. It jumped Friday to trade near 20.38 in late trade.

Meanwhile, the "worst-kept secret" on Wall Street is that stocks enter a seasonally weak stretch, Cappalleri wrote. "Despite the exaggerated swings we've seen in 2025, the S&P 500 has generally tracked seasonal tendencies closely up to this point."

Check out: August is historically a bad month for Big Tech stocks. What to expect this year.

After three straight monthly gains that saw the S&P 500 rally around 30%, the character of the market was bound to change at some point, he said.

Globalt's Martin remains upbeat on the market's long-term prospects, but said it wouldn't be a shock to see the market give back some ground in the near term.

"I think people get nervous when they have profits and then they kind of see them disappear," he said. "This could feed on itself for a little bit, that's what the seasonals tell you."

Earnings multiples are stretched after the rally off the April lows, which could justify a pause for the market, he said. But earnings held up in the second quarter and the labor market appears to remain in good shape despite the July data with the unemployment rate at 4.2%.

"I don't really think the labor market falls apart," he said. "In the absence of some bigger surprise like that people are going to come back in and buy the dip shy of 10%."

See: Bonds and the dollar are sounding the alarm about the U.S. economy. Stock investors might want to heed the warning.

-William Watts

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August 02, 2025 08:30 ET (12:30 GMT)

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