Bank of America: August to October could be the toughest period for US stocks this year, with defensive assets such as gold and the US dollar likely to benefit.

US Bancorp Securities technical analyst Paul Ciana released a report noting that historical data shows August to October is typically the weakest rolling three-month period for the S&P 500, meaning US stocks may face their toughest phase of the year. The report points out that since 1928, the S&P 500 has delivered an average return of nearly zero (-0.02%) during August-October, with gains recorded in only 55% of years. This period also sees the largest average drawdown of any rolling three-month window, hitting 7.35%. Ciana emphasized that seasonal weakness does not indicate a reversal of long-term trends. Historical data shows November through January is a traditional strong window for US stocks, with the S&P 500 averaging a 3.54% gain. On the asset front, Bank of America (BofA) believes defensive assets such as the US dollar, US Treasuries, and gold tend to outperform during August-October. Gold has risen 61% of the time in this window since 1992, with an average gain of 2.52%; yields on the 30-year US Treasury have historically trended downward. Energy assets may be an exception to late-summer trends. The Bloomberg Energy Index has posted an average historical gain of 2.42% in August, and crude oil prices also tend to find support in late August. BofA cautioned that investors should monitor risks from seasonal volatility and allocate to defensive assets to hedge against potential market pullbacks.