Stovall on Sectors: A Favorable Finale?

SP Capital IQ |


At this week’s investment policy committee meeting, we discussed the high level of investor bullishness and average increase in share prices during December.

Maybe it’s the optimism of the gift-giving season, the sentimentality surrounding the closing of another year, or investor’s switch to focusing on the earnings projections for the end of next year rather than the end of this year, but the S&P 500 has traditionally recorded its best average performance in December. The most compelling reason for feeling optimistic about the S&P 500’s potential performance in the month ahead, in my opinion, is its magnitude and frequency of price increase, whether you look back to 1990, 1945, or 1900. And speaking of optimism, the average bullish reading in the American Association of Individual Investors’ member survey was also highest in December. So if investors are traditionally the most bullish in the final month of the year, and the S&P 500 posts its strongest monthly gains in that month, it should come as no surprise that the highest average price returns for all sectors in the “500” also occurred in December, led by the Industrials, Materials and Telecom Services sectors.

So there you have it. December tends to be a month filled with both holiday and investor cheer. Stocks traditionally have recorded their highest average increases, along with their greatest frequencies of advance, while investors have tended to be the most optimistic about the coming six months. Who’s to say if the same will occur this year, but the odds favor a positive performance, especially if the politicians play along.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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