Investors are again concerned about Covid-19. Rising infection rates have left stocks well in the red, with the for losing more than 2%
Dow Jones industrial average.
But fears of Covid – and the number of infections – have been increasing for weeks. Shares have largely wiped them out. The question for investors is: what’s different now?
The answer may not be as fundamentally driven as investors might expect. Today is a Monday and Mondays are bad for stocks.
black monday was, well, a Monday. That was October 19, 1987, when the Dow Dow fell nearly 23% in its worst one-day drop on record.
October 28, 1929, when the Dow fell more than 14%, was also a Monday. The same was true for December 1, 2008, when the 2008-2009 financial crisis left the Dow with a 7.7% loss. and the Dow fell 13% on Monday, March 16, 2020 due to Covid-19.
The four worst days in the Dow’s history were all Mondays, as were 13 of the 25 ugliest. Thirteen out of 25 is more than half – a lot considering that Monday represents about 20% of all trading days.
More on today’s sale
Why Mondays are so awful is up for debate. One factor could be that investors have a few days over the course of a weekend to reflect on broader trends in the market. Maybe that gives people the time they need to make the phone call they should sell. A closed market weekend is also more time for potentially negative news to develop.
Whatever the reason, Monday is more volatile than other days. The average price change on a Monday is about 20% greater, up or down, than during the rest of the week. Still, only about 20% of the best days in the market are Monday, so while the first trading day of the week only gets a fair share of the good days, it gets a lot more of the bad.
This means investors should take Monday’s sell-off with a grain of salt. The trends that cause stocks to fall may be real, but they can only be exacerbated by the day of the week.
Write to email@example.com