So far, September is living up to its reputation as the worst month for the stock market. But the worst of the pain might have already passed.
The ninth month of the year is historically the worst for stocks. According to Dow Jones Market Data, the S&P 500 has averaged a 1.1% decline in September since 1928. Typically, any summer optimism disappears in September as investors start looking ahead to the following year, with all its possible pitfalls.
“Performance in the three months following the close on 9/8 have been among the best relative to any rolling three-month period throughout the year,” the analysts wrote on Friday. Their analysis is a reminder of two generally accurate truisms about the market. First, mean reversion is a powerful force. Short-term gains tend to be followed by short-term losses, and vice versa.