September’s sell-off may have taken many investors by surprise after a hot start to the year. But history shows such pullbacks are actually pretty common. Bank of America strategist Ritesh Samadhiya noted that since 1950, there have been 15 instances in which the S & P 500 rallied more than 15% through July and then dropped an average 8% between August and September. The good news? The broader market index typically rebounds following such sell-offs, averaging a gain of 5% between October and December, the bank said. .SPX 3M mountain Rebound coming? “August saw a re-run of this playbook, as evidenced by the reversal in global equities after the 5% correction since July. And once the summertime blues are out of the way by the end of the quarter, global equity markets may well be in for a high single-digit rise by the end of the year,” Samadhiya wrote. The S & P 500 is down more than 6% since the end of July, losing more than 1.7% in August and 4.5% in September. Fears that the Federal Reserve will keep interest rates higher for longer, rising Treasury yields, the strong dollar and a surge in crude oil prices have pressured stocks in that time. The bottom line: The market has a history of losing steam between August and September after rallying to start a year. However, it doesn’t typically stay down for too long in such years. — CNBC’s Michael Bloom contributed reporting.
This story originally appeared on CNBC
