Surging Stock Market Is Heading Into Riskiest Months of the Year

Before investors get too excited about the July surge in stocks, here’s something to keep in mind: August and September are historically the two worst months for the S&P 500 Index.

Despite a 12.6% advance from a low of 3,666.77 on June 16, the S&P 500 could be facing an ugly stretch just after it had its best month since November 2020. Portfolio managers are debating whether stocks can maintain their recent gains with the Federal Reserve still on track to raise interest rates and the economy sending worrying recession signals.

Wall Street lore says October is the most dangerous month for the stock market because of crashes in 1929, 1987 and 2008. But August and September are actually worse, with the S&P 500 averaging declines of 0.6% and 0.7%, respectively, over the past 25 years.

“Is the rally durable? It needs conformation,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “Right now, the macro environment could easily tilt the market either way.”