See important Research Disclaimer.
The arrival of September proper (albeit with an extra day of malaise thanks to Labor Day) suggests that we will see the return of volatility to global markets, after a relatively quiet period for stocks, especially in the US. Volumes will rise and the calendar will begin to fill up once again.
Of particular note has been a slight slowing in one of the year’s key trends, namely the outflow from equity funds (both active and ETFs). Outflows over the past twelve months amounted to some $115 billion, and while this is high, it is down from the $160 billion that was seen earlier in the year. Perhaps finally investors are returning to equities. New all-time highs on the S&P 500 will do that to you, I suppose.
September doesn’t start out as one of the most promising months. Since 1950, the average decline for the Dow Jones in the month has been 1.1%, while the S&P 500 has fallen 0.7%. Even the Nasdaq has, on average, dropped by 1%. Coming at it from the other way, the average for the VIX in September over the past 25 years, has been 22, the highest of any month. Investors should therefore be on notice for increased movement in stock markets – the choppy rangebound days of August are now behind us.
One chart to be aware of, from Charles Schwab: