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Market Recap: Monday, August 31

The markets closed mixed with the Dow and S&P 500 closing in the red, while the Nasdaq saw a record close being the major performer of the day. The market also saw two major stock splits in both Apple and Tesla. The Final Round panel discusses the latest.

Video Transcript




SEANA SMITH: And that does it for the trading day today. Again, the Dow closing off just over 200 points as we shake out the losses here today. S&P off just around 2/10 of a percent. The NASDAQ, like I said, the only major index in the green today. But a couple of big stories to unpack that have been influencing the markets today. First, the Dow. We had the three new stocks added to the Dow as up today, Salesforce, Amgen, and Honeywell.

Taking a look at how those three stocks fared, Salesforce and Amgen both closing in the green. Honeywell, though, off just around 1.5%. But of course, the big story here is Apple, moving from the most influential component of the index to now just around the middle of the pack. And you can see it in the action of the index today, with Apple up just around 3.5%, yet we're seeing the Dow still over 200 points.

The S&P pushing-- it actually looks like it's going to close just below a 3,500. That was the level that many investors on the street were watching. So it looks like we will close just below that threshold. And then the NASDAQ, again, up just around 7/10 of a percent.

We also have two big stock splits today taking effect, Apple that 4 for 1 stock split, shares closing up just around 3%. Apple, we want to mention, closing its best month since 2008. So I know we're going to dig into that in a little bit later. But also Tesla the 5 for 1 stock split, shares jumping today, up just around 12%.

Taking a look at some of the sector action today, the big losers there energy, materials, and financials. And need to keep in mind here after the bell, Zoom, they will be out with earnings here any minute. It's a work-from-home winner. This stock up just around 400% from its 52-week low. We're going to bring you those numbers as soon as they are released.

Well, I want to be on my co-host for the next 60 minutes, joined by Myles Udland. We also have Yahoo Finance editor-in-chief Andy Serwer, along with Rick Newman, Akiko Fujita, and Jared Blikre joining us for the next hour. And Myles, let me just start with you. We're wrapping up August. It's been quite a month for stocks, and we're seeing the same names, it seems like, day in and day out carry this rally to the upside.

MYLES UDLAND: Yeah, I mean, not only are we seeing the same names carry the market to the upside, but then today we have the split news for Apple and Tesla. And I think it's just-- it's worth just mentioning that we saw these stocks rally considerably clearly in response to what the textbook teaches you is just a cosmetic change in the number of shares outstanding. It didn't change the value of Apple as a business or Tesla as a business, but very clearly, these stock splits were a catalyst for the price of these stocks to be higher today.

And I think that that's a nice representation of the animal spirits that are clearly out there in the market. As if the S&P having its best month in a couple of decades, the NASDAQ having its best month since the tech bubble, as if those aren't-- or its best August, I should say-- you know, since those times, as if that isn't enough of a representation of the animal spirits in this market, to see a stock of-- the-- one of the highest flying stocks in the market rise on a double-digit percentage basis just because there are now more shares of the stock outstanding I think is a very clean-- clean way to say, boy, things are a little bit-- a little bit crazy out there, even if we can back into all kinds of explanations for why it's not crazy that the S&P is up this much, or the Dow or even the NASDAQ. But just looking at Tesla specifically, boy, that is certainly speaking to something happening here among investors.

SEANA SMITH: Yeah, it certainly is. And Andy, I'd love to get your thoughts on this, because we talk about the excitement that a lot of these investors have around just a couple of names, and Myles pointing out the action that we're seeing in Apple and Tesla today, a lot of that fueled by the stock split. And it's interesting here when you take a look at both of these names because, like Myles said, nothing's really different about this story, nothing has fundamentally changed, yet investors continue to get so excited just about the future prospects of these two stocks.

ANDY SERWER: Well you know, it all sort of goes back to Warren Buffett. And you know, he's connected to the market action today, too, and we can sort of spin it all together. So Buffett had long warned about using stock splits to attract investors into shares, and saying that that attracts the wrong kind of investor, and the speculative investor. And I think that what happened with Apple and Tesla today really bears that out.

And of course, at the same time, there is news of him investing in these companies in Japan, Seana, these five companies, $6 billion, these trading companies, Mitsubishi, Mitsui, Sumitomo, a couple of others. And it's a classic value play. It's classic Buffett. It's contrarian. There's a conglomerate discount there. They have a lot of energy. He's gone into energy. He's actually gone into Dominion Energy, as well, over the past couple weeks.

So really making a bet the opposite direction, and oh, this is really bad that, you know, retail investors are running into these stock splits, except for one thing. Who's the biggest shareholder of Apple? Warren Buffett. So it's all kind of crazy right now, you know, that he's actually benefiting from the behavior of people doing things that he thinks is untoward, if you will.

Now, you know, he didn't-- he's not responsible for that. It's not a contradiction. It's a paradox and all that. But it does make for some interesting market action, where you've got Buffett on the one hand and Apple on the other. Oops, actually they're kind of one and the same.

SEANA SMITH: Yeah, that is interesting there, Andy, as you point that out, just because we're trying to make sense of all this and trying to justify it, and then bringing in how Warren Buffett has been critical of these moves in the past, yet he's one of the biggest beneficiaries of the massive runup that we've seen in the stock is certainly interesting. But Andy, you brought up the investments that he's making over in Japan. And I'm just curious just what your thoughts are there just in terms of the bet that he's having maybe-- is he making a bet, I should say, on the global economic recovery? Should we read any further into those placements there, into his investments into those five Japanese stocks?

ANDY SERWER: Oh yeah, before I get into that, the Japan thing, really quickly, Seana, you know this whole trend of Silicon Valley companies not splitting their stock, like Google and everything else, came from Buffett originally. So it's sort of interesting, another full-circle element. You know, Japan has been a dead zone for, wow, decades, really.

And I should know because I'm-- full disclosure, I own the Japan ETF, EWJ. I think I bought it like 15 years ago, and I'm happy to report it's done, like, absolutely nothing. Maybe it's gone down 5% over that time. So this is your expert over here. I did-- it was up like 4/10 of 1% on this Buffett news, but of course it was down 1.5% year-to-date, as it usually is. 1.5% year-to-date, I'm used to that performance from that ETF.

But you know, it's an incredibly opaque place when it comes to understanding the capital markets and the accounting these companies have. These companies, Seana, as you know, are called keiretsus, which are sort of interlocking networks of companies. And so very difficult to understand. Buffett must have done a lot of work here because I remember asking him about Japan before, and saying, oh, it's undervalued, and he said, no, it's not, no, it's not, no, it's not. And so now he must think it is.

But-- and then the energy exposure, boy, I wouldn't-- you know, petroleum right now, I wouldn't touch it with a 10-foot pole. But you know, he's Warren Buffett and I'm not, so don't listen to me. I bought Japan for just the wrong time, and he's probably buying it at just the right time. And there are these ETFs out there. For those of you who want to get the exposure, let me tell you, it's just great.

RICK NEWMAN: How do I join the Andy Serwer investing club?

ANDY SERWER: You want to short it. I'll tell you--

RICK NEWMAN: So people would want my money right off the bat?

ANDY SERWER: Short it. Short whatever I've got.

SEANA SMITH: [CHUCKLES] Whatever you have-- that's funny there, Andy. But I mean, 1.5%, it could have been much worse. So all in all, not too bad if you play it there. Maybe there is something to the Andy Serwer trade-- playbook, I should say.