Bank of America Securities said in its latest seasonality report that August through October has historically been the weakest rolling three-month window for the S&P 500 since 1928. According to the report, the index has posted gains only 55% of the time during that stretch, with an average return of -0.02% and an average drawdown of 7.35%, the largest among all rolling three-month periods. BofA said market positioning over the next three months may tilt toward defensive assets, with the U.S. dollar, gold and U.S. Treasuries historically outperforming stocks in similar periods. The report added that since 1992, gold has risen 61% of the time from August to October, with an average gain of 2.52%, while the dollar has also tended to strengthen in August against currencies such as the British pound and Australian dollar. The bank said seasonality does not mean U.S. equities are certain to fall, adding that the longer-term direction will still depend on corporate earnings, monetary policy, the economic cycle and valuations.
According to a recent seasonality report from Bank of America Securities, August through October has historically been the weakest rolling three-month window for the S&P 500 since 1928.
The report said the index has risen only 55% of the time during that period, with an average return of -0.02%. Its average drawdown reaches 7.35%, the largest among all rolling three-month periods.
Bank of America said market positioning over the next three months may lean more defensive. On a historical basis, the U.S. dollar, gold and U.S. Treasuries have generally outperformed stocks during this window.
Since 1992, gold has posted gains 61% of the time between August and October, with an average increase of 2.52%, the report said. The dollar has also tended to strengthen in August against currencies including the British pound and Australian dollar.
The bank added that seasonality does not mean U.S. stocks will necessarily decline. Longer-term market direction will still be determined by factors including corporate earnings, monetary policy, the economic cycle and valuations.
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