Adam Shell explains a bull market on the occasion of the current bull market breaking the record for longest ever. USA TODAY
The turning of the calendar to September might do what fears of a trade war and talk about the impeachment of President Trump could not: cause stock prices to fall.
September, the worst-performing month for the Dow Jones industrial average in the past 50 years, has been an even spookier month for investors than October, a month best known for stock market crashes in 1929 and 1987. The Dow has dipped 0.87 percent, on average, in September and finished higher only about one-third of the time (36 percent), according to data going back 50 years from Bespoke Investment Group.
On Tuesday, the first trading day of the month, the Dow dipped 0.1 percent.
“September is the banana peel month, as some of the largest slips tend to take place during this month,” Ryan Detrick, senior market strategist at LPL Financial, noted in a report. A good example is September 2008, when the Dow, spooked by the bankruptcy of Wall Street titan Lehman Brothers, plunged 6%.
To be sure, the U.S. stock market, which last month hit fresh record highs as the bull market became the longest in history, has a lot of things working in its favor. Corporate profits are growing at the best pace since 2010, and the economy last quarter posted its best growth rate in four years.
With stocks trading near record highs, and uncertainty related to trade and the outcome of the mid-term U.S. election hanging over markets, LPL’s Detrick said he would be “surprised if volatility didn’t pick up.”
Still, a deeper dive into the historical performance of stocks in September suggest the positive momentum that pushed stocks to a fresh record last month could continue, Bespoke data show. In years when the broad Standard & Poor’s 500 stock index has been up more than 5 percent for the year heading into September (as it was this year), the broad market gauge actually rose 0.36 percent in September and 4.51 percent the rest of the year.
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