Market Overview

The End Of September Has A Nickname: 'Dead Zone'

The End Of September Has A Nickname: 'Dead Zone'

There is a valid reason why the bottom half of September is considered to be a "dead zone" for stocks, CNBC reported.

The S&P 500 index has traded lower during the final two weeks of September 70 percent of the time dating back to 1980, Kensho data has shown. In fact, over this stretch of time the index's average return stands at negative 1.30 percent. But among the other major indices, the Dow Jones Industrial Average and Nasdaq 100 index, the Dow suffered the lowest losses.

The Dow's average return in the second half of September since 1980 is negative 1.43 percent while the Nasdaq's average return is negative 1.46 percent.

There are plenty of reasons for history to hold true this time around, Ryan Detrick, senior market strategist at LPL Financial, told CNBC. Specifically, the Federal Reserve appears to be ready to start unwinding its massive $4.5 trillion balance sheet during its two-day meeting this week. Prior balance-sheet reductions have resulted in recessions but this time around the size of the balance sheet is unprecedented.

Meanwhile, ongoing concerns over the North Korean threat haven't gone away, and terrorist attacks across the world remain the norm.

So investors looking to protect their capital may want to consider shifting investments towards utilities and telecommunications. Both of these sectors traded positively 61 percent of the time in the back half of 2017, CNBC noted. However, on average, the utility sector returned negative 0.1 percent and utilities lost on average 0.2 percent.

Related Links:

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