BofA: August to October Historically the Weakest Season for U.S. Stocks
Taylor Wilson
BofA technical analyst Paul Ciana flags August-to-October as the S&P 500's worst rolling three-month window since 1928 — average return near zero at −0.02%, deepest average drawdown at 7.35% — the seasonal anchor behind the bank's defensive stance since late May.
How weak is the August–October window, exactly?
The S&P 500 has risen in only 55% of years during this stretch, with an average return of −0.02% — essentially flat.
The real problem is the drawdown: the average peak-to-trough drop hits 7.35%, the deepest of any rolling three-month period.
This means → Even when the quarter ends roughly flat, the ride down and back up can be violent.
Are all indices equally vulnerable?
No. The Dow Jones Industrial Average is the most resilient in August — 62% up-probability, average gain of 0.86%.
In plain terms = Large-cap blue chips hold up better than the broad market during the late-summer soft patch.
International equities have historically underperformed US stocks in August, making the US market the relative outperformer globally.
When stocks weaken, where does capital flow?
The US dollar tends to strengthen in August: it has appreciated against the pound 65% of the time and against the Aussie dollar 69%.
Among EM currencies, the South African rand is the weakest seasonally — the dollar has gained against it 73% of the time in August, averaging +2.19%. BofA flags this as a preferred seasonal trade.
Gold is the clearest beneficiary: up 61% of the time during August–October, averaging +2.52%, historically rallying in tandem with falling Treasury yields and soft equities.
What about bonds and energy?
The US 30-year Treasury yield tends to fall in August, especially in the second year of a presidential cycle — roughly three-quarters of observations show a decline, averaging 18 basis points.
This means → Falling yields = rising bond prices. Long-dated Treasuries have historically played a safe-haven role in this window.
Energy is the outlier in an otherwise defensive picture: the Bloomberg Energy Index averages +2.42% in August, and crude prices tend to strengthen in the final third of the month.
How long should the defensive posture last?
Seasonal weakness does not equal a long-term bearish call. Historically, late-summer pullbacks set the stage for strength — the S&P 500 averages +3.54% from November through January.
In plain terms = Endure the August–October chop, and markets often deliver a year-end rally.
BofA's strategic logic: seasonality is one input among many, but the historical evidence suggests defensive positioning is the more prudent choice before the traditional strong season arrives.
Content is for reference only, not financial advice.