In recent years, August has been a month when the stock market has hit an inflection point.”It was August 30, 2010, when the market definitively turned around after a bout of summer weakness that had resulted in a 16% peak-to- trough decline,” writes LPL Financial’s Jeff Kleintop in his Weekly Market Commentary. “It was during the first few days of August 2011, when the S&P 500 plunged 13%, accounting for most of the 19% peak-to-trough decline experienced last year.”
Analysts and economists have given a number of reasons why this happened over the last few years.
However, Kleintop points to another interesting phenomenon that tends to occur in August.
“August is the peak month for new babies to arrive,” writes Kleintop.
More from his note:
The market is behaving like it is nervously expecting a big event. The stock market has been jumpy with frequent reversals in direction. In the first quarter of 2012, only rarely did the S&P 500 move 1% in either direction (just seven of the 61 trading days). But since mid-May 2012 when the S&P 500 was at a similar level to Friday’s (July 6, 2012) close, about half the time (14 of 27 trading days) the stock market has moved by 1% in either direction. Over that same time period, we have seen about the same number of up and down days for the market—often as reversal in direction of the prior day’s move.