Bank of America: August to October May Be the Most Challenging Period for US Stocks This Year, Gold and US Dollar as Defensive Assets Could Benefit

BlockBeats News, July 27th: U.S. Bank of America Securities technical analyst Paul Ciana released a report stating that historical data shows that August to October is usually the weakest three-month period for the performance of the S&P 500 Index, and U.S. stocks may face the toughest phase of the year.

The report pointed out that since 1928, the S&P 500 has had an average return close to zero (-0.02%) during the period from August to October, with the percentage of rising years only at 55%. It is also the stage with the largest average drawdown among all three-month rolling periods, with an average drawdown of 7.35%.

Ciana stated that seasonal weakness does not mean a reversal of the long-term trend. Historical data shows that November to January of the following year is often a traditional strong period for U.S. stocks, with the S&P 500 averaging a 3.54% increase.

Regarding assets, Bank of America believes that defensive assets such as the U.S. dollar, U.S. bonds, and gold tend to perform well during August to October. Among them, gold has a 61% probability of rising since 1992 during this window, with an average increase of 2.52%; historically, the U.S. 30-year Treasury bond yield also tends to decline.

In addition, energy assets may be an exception during the late summer market. The Bloomberg Energy Index has an average historical increase of 2.42% in August, and crude oil prices often find support in late August.

Bank of America reminds investors to be aware of the risks brought by seasonal fluctuations and to address potential market pullbacks through the allocation of defensive assets.