Stocks face their weakest seasonal stretch. Why extreme investor pessimism could limit any selling.

Core Impact Points

• US stocks face their weakest seasonal stretch, historically, but investor sentiment could help limit any pullback.
• Ned Davis Research suggests that extreme investor pessimism could be a factor in limiting any potential selling.
• This seasonal weakness typically occurs from mid-June to mid-October, with the S&P 500 index averaging a 1.4% decline during this period.
• However, the current level of investor pessimism is unusually high, which could help mitigate any potential losses.
• The S&P 500 index has historically averaged a 1.4% decline during this period, but the current market conditions may differ due to the high level of investor pessimism.