The next couple of months may not be as bearish as they’ve generally been in the past
As we head into August, the S&P 500 Index (SPX) is on a three-month win streak, gaining about 14% over that span. Investors may be nervous, however, as we head into one of the more bearish times of the year. The table below summarizes the monthly returns of the SPX since 1975.
August has averaged a return of 0.17% with 56% of the returns positive. It has been the third worst month of the year by both of those metrics. It’s the second worst month by the median return of 0.54%. While the August performance has been poor compared to other months, what’s scarier is that the next month, September, has been the absolute worst month of the year and it’s not very close. When we focus on two-month returns, we are definitely heading into the most bearish part of the year.
Two-Month Time Frames
The table below looks at two-month timeframes. August through September has averaged a loss of 0.73% with 54% of the returns positive. The poor performance is due to both the lack of upside when it’s positive and big downside when it’s negative. The average return when it was positive was 3.52%, the lowest of the two-month time frames. When it was down it averaged a loss of 5.71%, the third lowest of the time frames.
The data in this next table is encouraging. It shows how August and August-September performed when the SPX was up the three months in a row before August. There have been 12 instances since 1975, and August has been positive all 12 times averaging a gain of 2.83%. The next two months averaged a return of 3.06% with 11 of the 12 returns positive.
Notable Stocks August through September
In this section, I’ll list stocks which have bucked the trend of the poor seasonality and some which have contributed to it. This first table shows the S&P 500 stocks which have performed the best from the end of July through September. Nvidia (NVDA), which recently reached $4 trillion in market capitalization, tops this list.
Finally, the list of stocks below performed the worst from August to September over the past 10 years.