Baron’s Says Brace for a Bad September

The opening paragraph in September is Usually a Bad Month for Stocks. This One Could be Ugly is as follows:

The stock market's worst month—September—is approaching. This one could be particularly bad.

Despite the fearful headline, the following paragraph states that the S&P has only averaged a 1% loss in September going back to 1928. The graph below also shows that September tends to be challenging but not "ugly." To help justify using the word "ugly," the author offers the following reasons to be concerned:

• "The stock market has already ripped higher recently, with both indexes up double digits in percentage terms since their lowest levels of the year in mid-June."
• The probably of the Fed hiking by .75% at its September meeting
• Bond yields moving higher
• Oil prices perking back up

Despite the author's concerns, the chart below shows that the market's behavior in midterm election years is very different than in non-midterm election years. Based on the average for midterm years, we should expect a weak start to September and a strong run higher for the remainder of the year.

Lance Roberts