Bank of America: US Stocks May Enter the Weakest Three-Month Window of the Year; Defensive Assets Like Gold and the US Dollar Stand to Benefit

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

The report notes that over the next three months, the market may lean towards defensive allocations, with the US dollar, gold, and US Treasuries historically outperforming equities. Since 1992, gold has had a 61% probability of rising during August to October, with an average gain of 2.52%. The US dollar also tends to strengthen against currencies like the British pound and Australian dollar in August. However, Bank of America emphasizes that seasonal patterns do not guarantee a decline in US stocks; long-term market trends will still depend on factors such as corporate earnings, monetary policy, the economic cycle, and valuations. (Jin Shi)