On Friday investors closed the books on the month of August, just ahead of the long Labor Day weekend, and this marks the unofficial end of summer on Wall Street. A number of the market indexes I track traded at or near all-time highs on August 29. What can we expect from US equities over the coming month?
Historically the S&P 500 has been weak in September — a softness in performance that’s often accompanied by an uncomfortable uptick in volatility. Check out the chart to the right from Bespoke for a monthly performance comparison over the past 20, 50 and 100 years (click to enlarge). It’s not just the S&P 500 displaying this seasonal pattern. The Stock Market Almanac reports that “Since 1950, September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971) and Russell 1000 (since 1979).” Gulp.
However, before you make a mad dash for the exit door, keep in mind that August is another typically lousy month for US stocks and yet the S&P 500 just posted its best August return in 14 years. Performance data below is also courtesy of Bespoke.