Home ›› 29 Aug 2021 ›› Stock
A rally in which US stocks have doubled from post-pandemic lows is about to enter the year’s worst month for equities, as investors focus on a nationwide COVID-19 resurgence and how quickly the Federal Reserve plans to pull back on its easy money policies.
September has been the worst month of the year for the S&P 500 (.SPX), with the benchmark index falling an average of 0.56 per cent since 1945, according to Sam Stovall, chief investment strategist at CFRA. The S&P has advanced only 45 per cent of the time in September, the lowest rate of any month, CFRA’s data showed.
This time around, stocks have momentum on their side. The S&P 500 notched its 52nd record closing high of the year on Friday and has gained 20 per cent so far in 2021, having gone 287 calendar days without a pullback of 5 per cent or more.
That type of performance has signaled comparatively strong returns in the past. The index has gone on to deliver a median gain of 5.2 per cent for the rest of the year during years when it made 30 or more new highs through August, according to data from LPL Financial. That compares with a median gain of 3.6 per cent for all years, the firm's data showed.
A speech by Fed Chair Jerome Powell on Friday helped allay concerns that the central bank will pull back too soon on the $120 billion in monthly government bond.
