Dow and S&P 500 soared in July but the trend won’t last

The Dow and the S&P 500 logged some serious gain in July. The S&P has added more than 3 percent and the Dow has jumped about 4.7 percent. Both indices had their best month since January.

However, using history as a guide, the bullish trend could be about to reverse.

Over the past thirty years, August has not been a kind month for stocks. All three major indices post negative average returns in summer’s final full month, with the Dow dropping 1.3 percent, the S&P 500 shedding 1.07 percent and the Nasdaq slipping 0.47 percent.

When it comes to individual sectors, only one has managed to post a positive return – the utilities sector. Among the sectors that average the biggest drops, financials and consumer discretionary sectors each lose over 1.5 percent, while the telecom sector drops over 2 percent.

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