Why June, Usually the 2nd Worst Month for Stocks, Is Doing Fine in 2018

The recovery from the market’s winter correction is aiding this month’s performance, so far.

June is the second-lowest month for stock returns, as measured by the S&P 500. But thus far in 2018, it isn’t shaping up that way. In fact, halfway through at least, June is ahead of the five previous months.

Thanks to the correction that started in late January, when the index peaked, stocks have been in slow recovery mode. February and March were negative, April was up 0.27% and May 2.16%. At the midpoint of June, the benchmark index is ahead 2.7%. If that holds, the month of weddings and graduations will confound historical averages.

Since World War II, the S&P 500 logged an average 0.002% price gain in June, versus 0.67% for all other months, noted Sam Stovall, chief investment strategist at CFRA. To find the best June return, you have to go back to 1955, he said. And June recorded the third-fewest all-time highs of any month.

Of course, the worst is September, a month noted for the Lehmann Brothers collapse in 2008. The two other big disasters—the 1929 and 1987 crashes—occurred in October. But statistically speaking, according to CFRA research, September has the dubious honor of being the laggard.

Why could this be? By Stovall’s reckoning, investors often sell blah stocks in September to dress up their performance before the end of the usually quiet third quarter, which is vacation time. Another possible explanation: People who didn’t do much trading during the summer, a traditional low-volume season for stocks, return from their Labor Day holiday bent on dispensing with the dreck.

Another Wall Street dictum is: “Sell in May and go away.” Maybe that’s why June is so historically lackluster.

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