Here Comes the Fourth Quarter

Hard to believe it, but the fourth quarter starts next week! Per Ryan Detrick, Senior Market Strategist, “History has shown that the fourth quarter has frequently been kind to equities, as it includes the usually strong and feel-good months of November and December.” Since 1950, the S&P 500 Index has gained +3.9% on average and is higher 79.1% of the time, making it the strongest quarter of the year.

To break it down a little more, September is known as the worst month of the year on average; but given the fact the S&P 500 has made multiple new all-time highs this year, 2017 bucks that trend. As the table below shows, the index has been up 5.2% on average in the fourth quarter when it makes a new all-time high in September. Taking things a step further, when the S&P 500 is up more than 10% year to date heading into the fourth quarter, and it makes a new high in September (like in 2017), the returns have been even better—up 5.9% on average, boasting positive returns 11 out of 12 years.

Although we aren’t looking for a 6% jump in equities in the fourth quarter, this study suggests that the chances of a major sell-off are rather slim. In fact, should any type of a pullback occur in the fourth quarter, we would view it as a buying opportunity.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This research material has been prepared by LPL Financial LLC.

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