Morgan Stanley expects a sharp contraction in corporate earnings to weigh on US equities this year, and it sees the S&P500 lower at 3,900 by year-end. However, Goldman Sachs are expecting mild growth from the S&P500 this year. So, with the path of inflation unknown, analysts are divided on whether the Fed will hike in June, skip a meeting, or pause rates. Furthermore, global growth prospects are also in the balance, so the path for US stocks in June is far from clear.
So, let’s see what the S&P500 is like from a seasonal perspective.
Over the last 15 years, the S&P500 has lost value 60% of the time between June 1 and June 30. The S&P500 has seen an average fall of -0.43%, with the largest fall of -7.70% last year.
So, with a potentially weak seasonal period ahead, traders should note that a sudden bearish policy shift from the Fed on June 14, could see stocks fall lower in line with their weaker summer seasonal pattern.
Major Trade Risks: The major near-term trade risk here is if inflation cools suddenly and the Fed announces a rate pause when they meet on June 14.
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