[ad_1]
Text size
The New York stock exchange. (Photo by Angela Weiss / AFP)
AFP via Getty Images
Investors are worried again about Covid-19. Rising infection rates have left stocks far in the red, with a loss of over 2% for the
Dow Jones Industrial Average.
But Covid fears and infection rates have been rising for weeks. The stocks have, for the most part, swept them away. The question for investors is what is different now?
The answer might not be as fundamentally motivated as investors might expect. Today is a Monday, and Mondays are zero for stocks.
Black Monday was, well, a Monday. It was October 19, 1987, when the Dow Jones fell nearly 23% in its worst one-day decline on record.
October 28, 1929, when the Dow Jones fell more than 14%, was also a Monday. The same was true of December 1, 2008, when the 2008-2009 financial crisis left the Dow Jones with a loss of 7.7%. And the Dow Jones fell 13% on Monday March 16, 2020, because of the Covid-19.
The four worst days in Dow Jones history were all Mondays, as were 13 of the 25 ugliest. Thirteen out of 25 is more than half, which is a lot when you consider that Monday makes up about 20% of all trading days.
Learn more about today’s sale
Why Mondays are so awful is up for debate. One factor could be that over a weekend investors have a few days to reflect on the broader market trends. Maybe it gives people the time they need to make the call they need to sell. A weekend with the market closed is also more time for potentially negative news to develop.
Whatever the reason, Mondays are more volatile than other days. The average price change on a Monday is about 20% higher, up or down, than during the rest of the week. Yet only about 20% of the best days in the market are Mondays, so while the first trading day of the week only gets its fair share of the good days, it receives a lot more of the bad.
This means investors should accept a massive sell-off on Monday with a grain of salt. Downtrends in stocks can be real, but they can be exacerbated by nothing more than the day of the week.
Write to [email protected]
[ad_2]
Source link