The Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq 100 Index Seasonality may stifle price movement as the summer doldrums weigh on market activity. Tight trading ranges, on the other hand, are not inherently negative, as the larger fundamental landscape remains positive. The Dow Jones Industrial Average, S&P 500 Index, and Nasdaq 100 Index entered the third quarter on the heels of yet another excellent performance in the post-pandemic era, as stocks rose across the board. With the overall economic recovery expected to provide a moderate tailwind for the major indices, equity investors will have to navigate seasonality worries, monetary policy shifts, and infrastructure expenditure as they try to figure out the finer elements driving stock prices in the coming quarter. While the overall equities environment is favorable for additional gains, seasonal headwinds may limit price movement and impede attempts to go higher. July, August, and September have witnessed some of the lowest trading volume in the S&P 500 since 1990, and if the second quarter’s finish is any indication, price movement may dry up across markets without a new set of triggers. S&P 500 Average Monthly Returns & Average Monthly VIX (Chart 1) Bloomberg is the source of this information. Lower volume and volatility aren’t necessarily negative, but they can make it more difficult for price breakouts to occur, as well as follow-through, if a breakout does occur. Download our new 3Q trading advice from the DailyFX Free Trading Guides to read the full Equity forecast, including the technical outlook!
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