August bodes ill — again

NEW YORK — August has long been a dismal month for Wall Street, with stocks suffering some of their worst declines amid economic problems in the United States and political troubles overseas. Given current earnings and economic conditions, which are improving but still sluggish, this August promises to be no different.

During the past 15 years, the Dow Jones industrial average and Standard & Poor's 500 index have had their worst monthly performance during August, with the Dow off an average 1.9 percent and the S&P 500 down an average 1.6 percent, according to Jeff Hirsch, publisher of the Stock Trader's Almanac.

August has also been the second worst month, behind September, for the Nasdaq composite index. On average, the Nasdaq has lost 0.6 percent during August.

At times in the past there have been specific political events that drove the market lower in August. In 1998, stocks fell when Russia's ruble crashed. In 1990, investors sold off stocks in response to Saddam Hussein's Aug. 2 invasion of Kuwait.

But Hirsch attributed the August curse mostly and simply to the time of year. With second-quarter earnings season nearly over, many investors and traders will take a break from the market.

"There will be fewer people on Wall Street this month. Kids are out of school. People are hitting the beach," he said. He also noted that trading volume is typically low in August, and has already been declining in recent weeks.

And what makes this August problematic, analysts say, is that while economic data — such as the surprisingly strong second-quarter gross domestic product reported Thursday — are turning more positive, stocks are already priced at a premium.

"You've already had a big move," said Gary Kaltbaum, president of Investors' Edge Partners, a money management firm in Orlando, Fla., predicting a lackluster August at best.

Wall Street's main gauges ended this week lower. For the the Nasdaq and S&P, it was the second losing week in three.

The Dow ended the week down 130.60, or 1.4 percent, closing Friday at 9,153.97.

The Nasdaq had a weekly loss of 15.08, or 0.9 percent, closing at 1,715.62 on Friday. The S&P fell 18.53, or 1.9 percent, for the week, closing at 980.15.