Labor Day is almost here and some ETF traders are already hunkering down for September, historically the worst performing month for equities since the turn of the last century.
The S&P 500 has dropped an average 0.7% in September since 1900, writes Sam Stovall, chief equity strategist for S&P Capital IQ, in a research note. Additionally, the month of September has marked the worst decline of all months in 1931 when it plunged 29.9%. [Cyclicals Lead Stock ETFs Above Their Trend Lines]
When looking solely at election years, the market’s performance in September has remained relatively flat since 1900, rising 15 times and dropping 13 times.
Nevertheless, Stovall points out that the median market performance has typically dipped in September as stocks fell in the few weeks ahead of the election before recovering and posting its yearly high in the final 50 trading days.
Stovall also believes that the markets may experience a heightened level of volatility.