December Sees Fewer Silent Nights As Volatility Bucks Its Seasonal Trend

December Sees Fewer Silent Nights As Volatility Bucks Its Seasonal Trend
Andrew Rummer

about 2 years ago1 min

Mentioned in story

December has historically been the quietest month for US stock markets as investors hunker down for the holiday season. But concern about the Omicron coronavirus variant and central banks’ moves to remove stimulus has flipped the script this year. 

The chart above shows how S&P 500 price swings (in dark blue) have surged this month, whereas they tend to fall at this time of year (as shown in light blue). 

Slicing the data a different way, the chart below shows how each month of 2021 has compared to its average over the past seven decades. The S&P 500 has posted an average daily move of 1.07% so far this December, nearly double the long-term trend.

December volatility chart

The good news, according to Bespoke Investment Group’s analysis, is that a nervy December doesn’t necessarily bode ill for the future. Following the last five occasions when December was the most volatile month of the year, the S&P 500 went on to record an average gain of 2.9% the following January and 9.3% the following year.

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