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The line between failure and success is so fine. . . that we are often on the line and do not know it.” -Elbert Hubbard

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

After an all-around bad week for stocks, markets are looking to rebound this morning with the Nasdaq leading the way higher. There’s not much in the way of a catalyst for this morning’s bounce and little in the way of economic data. The New York Fed’s survey of Consumer Expectations has been an important report in recent months, but now that the Fed has shifted its focus from inflation to employment, it doesn’t have the heft it used to have.

September didn’t start well. Since 1953, when the five-day trading week in its current form began, this year ranks as the worst first week for the S&P 500 on record. As shown in the chart below, there have only been four other years where the S&P 500 dropped 2.5% or more to kick off the month. Before this year, the record for worst start to kick off the ninth month of the year was 2001 with the other years being 1987, 2008, and 2015. To use a basketball analogy, these years are to bulls what the Detroit Pistons were to the rest of the NBA in the late 1980s and early 1990s.

In the next chart, we show the S&P 500’s performance from the close on 9/7 (or the most recent close before that) through the end of September. For all years since 1953, the median performance was a decline of 0.56% with gains just 44% of the time. In the four other years when the S&P 500 was down 2.5%+ in the first week, the rest of the month tended to be even weaker with the S&P 500 down three times and up just once.

We all know that September is typically weak, so the numbers above shouldn’t be a surprise, but what about the rest of the year? The next chart shows the S&P 500’s performance from the close on 9/7 (or the most recent close before that) through year-end. For all years since 1953, the median rest-of-year performance was a gain of 4.16% with gains 76% of the time. In the four prior years shown the rest of the year was evenly split between gains and losses, but the magnitude of the gains was much less than the losses. In the two years where the S&P 500 rebounded through year-end, the S&P 500 was up 5.74% (2001) and 6.39% (2015), but in the years when it continued lower, the losses were four times larger in magnitude with declines of 21.98% (1987) and 27.29% (2008). Gulp.

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