Best and Worst Stocks to Own This Labor Day

Investors should wait a week before buying into those bullish returns

Senior Quantitative Analyst
Sep 1, 2021 at 8:00 AM
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    Labor Day is next week, so markets will be closed on Monday. A positive return for the S&P 500 Index (SPX) heading into the holiday week has been a good omen for stocks, and the index is up big on the year. When stocks have been positive heading into Labor Day, the S&P 500 has averaged a return between 3.5% and 4% for the rest of the year. Almost 80% of those returns have been positive, and it hasn’t mattered whether stocks were up double-digits, like this year, or less. When the index was in the red, however, stocks averaged a slight loss for the rest of the year, with 58% of the returns positive.

    IotW Chart 1 0831

    Below, I will be looking at Labor Day week data specifically. You may want to wait a week before buying into those bullish returns mentioned above.

    Wait Before You Buy

    Here is what I mean by suggesting you wait a week to buy stocks: Over the past 20 years, the SPX has averaged a 0.27% loss during the four-day Labor Day week. Half of these returns have been positive. Even over the past 50 years, the index has averaged a slight loss on the week, with just a 50:50 chance of a positive return.

    IotW Chart 2 0831

    The table below breaks down the week of Labor Day over the past 20 years. Going by the average return, Wednesday has been the only good day of the week, historically speaking. It averages a positive return of 0.31%, though only half of the returns have been positive. Friday has been positive 60% of the time, but the losses tended to be bigger than the gains, leading to an average loss overall for the last day of the week.

    IotW Chart 3 0831

    Top and Bottom Performers

    Below are the 25 best and worst S&P 500 stocks during the week of Labor Day over the past 10 years. The stocks are sorted first by percent positive and then by average return. I am not sure why Labor Day week would be good or bad for any particular company, but with these stocks you can at least know whether or not seasonality is on your side.

    IotW Chart 5 0831

    IotW Chart 6 0831

     

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