Dow, S&P 500 and Nasdaq open lower as September kicks off with oil spike and yield jitters

September showed up exactly on brand. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all opened lower on September 1, extending losses from the final session of August and reminding investors why this particular month has earned its grim seasonal reputation.

The sell-off isn’t random. Surging oil prices, multi-month highs in Treasury yields, and simmering geopolitical tensions between the US and Iran have combined into the kind of cocktail that makes portfolio managers reach for antacids.

What happened on the last day of August

On August 31, all three major indices closed in the red, setting the stage for a shaky September open.

The Dow dropped roughly 374 points, falling about 0.59% to close near 53,185.90. The S&P 500 shed between 25 and 27 points, sliding around 0.35% to settle in the neighborhood of 7,685. The Nasdaq gave back about 31 points, dipping approximately 0.15% to close at 26,370.89.

West Texas Intermediate crude jumped more than 2% to around $87.81 per barrel. Brent crude climbed 1.8% to approximately $92.15. The trigger was renewed military tensions between the US and Iran, which injected fresh uncertainty into global energy supply expectations.

The September effect and what’s driving caution

September has historically been the worst month for US equities. Since 1926, the S&P 500 has posted an average return of negative 0.7% during the month.

Treasury yields climbed to multi-month highs on August 31, reflecting expectations that the Fed may need to keep rates elevated longer than markets had been pricing in.

The VIX closed below 15 on August 31. That’s a level generally associated with calm, almost complacent markets. In other words, traders are selling, but they’re not panicking.

August wasn’t all bad

The Nasdaq posted a 3.93% gain for the month, powered largely by continued strength in technology and AI-related stocks. The S&P 500 and Dow also logged positive monthly returns, though neither matched the Nasdaq’s pace.

What to watch this week

The market’s attention is already shifting to a cluster of labor market data that could shape Federal Reserve expectations for the rest of the quarter. The JOLTS job openings report and the nonfarm payrolls release are both on deck, and either could meaningfully move the needle on rate-hike probabilities.