BofA's Equity and Quant Strategist, Savita Subramanian's thesis in the report "What Seasonality?" is centered on the surprising performance of the S&P 500 during September, a month typically known for its weak market performance. The report outlines how the S&P 500 managed to achieve a 2.1% gain on a total return basis, marking its best September since 2013 and the first positive September in five years. This unexpected performance was part of a broader trend of market gains, with the S&P 500 experiencing its fifth consecutive month of positive returns.
Key points from the report include:
- Market Performance: "The S&P 500 gained 2.1% on a total return basis, the best September since 2013 and the first positive September in five years. It was the fifth straight month of gains and the 10th positive month in the past 11 months" [1].
- Sector Rotation: "The real action was within the market, where the equal-weighted S&P 500 (SPW) jumped 9.4%, the best 3Q since 2010. It was also the best 3-mo. outperformance by SPW since Dec. 2022" [1].
- Sector Performance: "Energy was the only sector that fell in 3Q (-3.1%) as WTI oil fell 12.5% - "Energy is a bear trap." The biggest winners in 3Q were rate-sensitive sectors, led by Utilities (+18.5%) and Real Estate (+16.3%)" [1].
- Value vs. Growth: "In 3Q, Value led Growth (+9.4% vs. 3.2%) for the first quarter since 4Q22" [1].
These insights suggest that despite historical trends indicating September as a weak month for stocks, various factors such as lower interest rates and sector rotations contributed to an unexpectedly strong market performance.
Savita Subramanian is Head of Equity and Quant Strategy at BofA Global Research.
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