It is unofficially summer’s last hurrah for Wall Street investors.
U.S. financial markets will be closed for Labor Day on Monday, Sept. 6, marking a three-day weekend in the U.S., following what has been a mostly spectacular run for the stock market. The rally came despite concerns about the spread of the delta variant of the coronavirus and unease about the timetable for an eventual rollback of easy-money policies implemented by the Federal Reserve at the onset of the pandemic last year.
On Monday, U.S. stock exchanges, including the Intercontinental Exchange Inc. ICE, +0.33% -owned New York Stock Exchange and Nasdaq Inc. NDAQ, +0.31%, will be closed, so don’t look for any action in individual stocks or indexes including the Dow Jones Industrial Average DJIA, -0.21%, S&P 500 SPX, -0.03% or Nasdaq Composite indexes COMP, +0.21%.
The S&P 500 has already notched 54 record closing highs in 2021 and was looking for its 55th on Friday, while the Nasdaq Composite was on track to book its 35th all-time high of the year. The Dow stood less than a percentage point from its Aug. 16 record, mid-afternoon Friday.
Sifma, the securities-industry trade group for fixed-income, also has recommended the bond market close on Labor Day, including trading in the 10-year Treasury note TMUBMUSD10Y, 1.326%, which was yielding around 1.33% after the U.S. August jobs report came in weaker than expected.
However, the Labor Department’s employment report, which showed that 235,000 jobs were created in August, far below expectations for more than 700,000, failed to dull expectations among sovereign debt investors for a near-term announcement of tapering of the Fed’s $120 billion in monthly purchases in Treasurys and mortgage-backed securities.
Is there any significance to the holiday for average investors, besides the time off in the U.S. and the barbecues?
But the May Memorial Day to September Labor Day period in recent years has proven a bullish stretch one for investors, according to Dow Jones Market Data. The Dow, for example, is up by about 2% over that period and averages a gain of 1.3%, producing a winning record 65% of the time. The Dow is currently enjoying a win streak, over the past six Memorial Day/Labor Day periods, representing the longest win streak since 1989. Last year, the markets gained nearly 15% over that time.
The S&P 500 is on a similar win streak and is up nearly 8% so far this Memorial Day-Labor Day period. It has risen more than 70% over that period in past years and averages a 1.7% gain. The broad-market index rose 16% during that time in 2020.
But if there is a bona fide trend in the Labor Day trading it may be this one that MarketWatch’s Steve Goldstein reports, quoting Raymond James strategist Tavis McCourt, who says that in the last two years, there was a big value and cyclical bias in stock markets after the holiday, and in 2018, markets basically collapsed after the summer drew to a close.
It is impossible to know if the stock market rally will peter out similarly this time around but there is a growing sense on Wall Street that valuations are too lofty and equity indexes are due for a pullback of at least 5% or better from current heights.
Markets will be back to business as usual on Tuesday and, of course, European bourses, including London’s FTSE 100 UKX, -0.36% index and the pan-European Stoxx Europe 600 SXXP, -0.56% will be open on Monday, as well as Asian markets, the Nikkei 225 NIK, +2.05%, Hong Kong’s Hang Seng HSI, -0.72% and the Shanghai Composite Index SHCOMP, -0.43%.