Prediction: September Will Be Volatile, but Stocks Will Rally After November Midterms
Expect a downturn before a market rally.
Historically, September has proven to be the weakest month for the stock market. Despite this pattern, I believe that stocks will experience a significant rally following the November midterm elections. The historical evidence supports this prediction. However, investors should be prepared for a challenging period in the market leading up to the elections.
The S&P 500 index, which comprises 500 of the largest U.S. companies, has experienced negative returns in September 55% of the time since 1928. The average loss during this month has been 4.7%. February ranks as the second-worst month for the S&P 500, with an average negative return of 0.1%. The negative returns in September are not merely a result of a few bad years; they have been consistent throughout the decades.
If you analyze the data from any decade, such as 1940 or 2010, the average return in September remains negative.
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