U.S. stock markets had their worst day since September 2022 this week, but to some investors, such moves shouldn’t come as a surprise. That’s because the S & P 500 often experiences its most volatile day of the year in August, a CNBC Pro study has revealed. Fears of a U.S. recession were the main culprit for the global market meltdown this week . Investors are also concerned that the Federal Reserve is behind in cutting interest rates to cushion an economic slowdown, with the central bank last week choosing instead to keep rates at their highest levels in two decades. Coincidentally, the summer month is second only to October for having the most volatile day each year since 1932, the analysis of FactSet data showed. One explanation for this is the low trading volumes in the month, as many market participants bask in the sun on vacation rather than face their trading terminals. On average, around 3 billion S & P 500 contracts are traded each day in August, which is about 20% lower than January, the month with the highest average trading volumes, according to trading volume data since 1999. While share prices often swinging dramatically in August, the total return for the month — and the volatility that represents — is often in the middle of the pack. On average, shares gain 0.5% in August, substantially more than the average loss of 1.2% incurred in December but much lower than January’s large gains of 1.67%. August as a whole has been the most volatile in a mere five years since 1928, compared to April, which spiked as the most volatile month in 15 different years. Methodology: The standard deviation of monthly price returns in a year was used to calculate the volatility of a month.
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