It has been a great year for stocks. As of July 30, 2019, the S&P 500 Index is up more than 20% so far in 2019. To put that in perspective, since WWII only seven years have been up more than 20% by the end of July, with 1997 being the last time it happened. Here’s the catch: August has tripped up many a good year, and we are on the lookout for potential seasonal weakness this time around as well.
“August has been tough on stocks historically and is actually the worst month of the year over the past 10 years,” explained LPL Senior Market Strategist Ryan Detrick. “Additionally, don’t forget this is a pre-election year. In August 2015 we had the surprise Chinese yuan devaluation, which lead to the first 1,000-point Dow drop ever, while August 2011 had the U.S. debt downgrade.” Both of those unexpected events happened in August and caused massive downside volatility.
Here are a few other takeaways to remember about August:
We won’t pretend to know why these significant and out of the blue events seem to always take place in August, but what we will say is with the S&P 500 up 20% for the year and near our fair-value target of 3,000, we are watchful for any developments that could lead to potential market weakness.
Last, as our LPL Chart of the Day, August Has Been A Rough Month For Stocks The Past 10 Years, shows, August has been tricky for stocks, especially over the past 10 years.
Please see the Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets for additional description and disclosure.
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This Research material was prepared by LPL Financial, LLC.
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