BofA: U.S. Stocks May Enter the Weakest Three-Month Window of the Year; Defensive Assets Like Gold and the Dollar Could Benefit

According to the latest seasonal research report from Bank of America Securities, since 1928, the rolling three-month window from August to October has typically been the weakest period for the S&P 500, with a probability of gain of only 55%, an average return of -0.02%, and an average drawdown of 7.35%, the largest among all rolling three-month cycles.

The report indicates that over the next three months, the market may lean towards a defensive allocation, with the U.S. dollar, gold, and U.S. Treasury bonds historically outperforming equities. Since 1992, gold has had a 61% probability of rising from August to October, with an average gain of 2.52%. The U.S. dollar tends to strengthen in August against currencies such as the British pound and the Australian dollar. However, BofA emphasizes that seasonal patterns do not necessarily mean U.S. stocks will decline, and long-term market trends will still depend on factors such as corporate earnings, monetary policy, the economic cycle, and valuations. (Jinshi)