"Dubbed the " September Effect," this phenomenon sees the S&P 500 averaging a negative 0.8% return since 1926, the only month with a consistent negative average over nearly a century. Theories abound as to why: from portfolio rebalancing by institutional investors to tax-loss harvesting and post-vacation market jitters."
"Since 1928, the S&P 500 has declined in September 55% of the time, with an average loss of around 1%, making it the worst-performing month across major indices like the Dow Jones Industrial Average and Nasdaq 100. Significant downturns, such as the 29.6% plunge in 1931 during the Great Depression or the 8.9% drop in 2008 amid Lehman Brothers' collapse, skew the average, but even the median return is flat at best."
September has historically been the weakest month for U.S. stocks, with the S&P 500 averaging a negative 0.8% return since 1926 and declining in September 55% of the time since 1928. Major indices like the Dow and Nasdaq also underperform in September, and significant downturns such as the 29.6% plunge in 1931 and the 8.9% drop in 2008 skew long-term averages. Common explanations include institutional portfolio rebalancing, tax-loss harvesting, and increased selling pressure after summer vacations. With 2025 bringing economic uncertainty and expectations of Federal Reserve rate cuts, investors face elevated volatility risks entering September. Historical data suggests caution but not panic selling, implying that strategic, data-informed approaches may better navigate seasonal weakness.
Read at 24/7 Wall St.
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