Monday Effect

The “Monday Effect” refers to a phenomenon in finance and behavioral Economics where Stock Returns on Mondays tend to be lower compared to other weekdays. This effect is often attributed to investor sentiment, where negative news over the weekend impacts trading behavior on Monday.

For instance, a study may find that historical Stock prices show a consistent pattern of lower Returns on Mondays. An example could be a major market Index, such as the S&P 500, often posting lower average Returns on Mondays compared to its performance on other days of the week.

In another case, a specific Stock, like Company XYZ, might experience a drop in Share price on Mondays following bad news reLeased over the weekend, while experiencing gains later in the week as investors react more positively once the initial shock has passed.