Is September really the ‘curse’ month for your investments? While history whispers tales of market weakness, a closer look at current S&P 500 trends reveals a surprising truth. Are you ready for what the autumn markets truly hold?

As the vibrant energy of summer gradually recedes, giving way to autumn’s cooler embrace, the financial markets frequently undergo a palpable shift. Historically, September has earned a notorious reputation among investors, often marked by increased market instability and a notable seasonal weakness that diverges sharply from the quieter, lower-volume trading of the preceding summer months.

Statistical data spanning over 75 years underscores this perception: the S&P 500 has consistently posted an average negative return of -0.7% in September, cementing its position as the worst-performing month for the stock market. Furthermore, a deeper dive into market trends reveals that since 1950, the S&P 500 has only achieved positive returns during September in approximately 44% of occurrences, a positivity rate significantly lower than any other month on the calendar.

However, an overreliance on historical seasonality can be misleading; these patterns represent a broader climate, not the immediate “weather” of current market conditions. A crucial factor in understanding September’s potential performance lies in analyzing underlying stock market trends and momentum. For instance, when the S&P 500 enters September trading above its 200-day moving average, its average price return for the month remarkably shifts to a positive 1.3%, with 60% of such instances yielding favorable outcomes.

This critical distinction highlights that the prevailing economic indicators and the market’s inherent strength can often override typical seasonal headwinds. Currently, the S&P 500 has been experiencing a period of sustained strength, with recent record highs suggesting robust momentum. This strong foundational trend provides a significant counterpoint to the historical “September weakness” narrative, advocating for a more nuanced investment strategy.

In parallel, market volatility, as measured by the CBOE Volatility Index (VIX), often sees an uptick as the year progresses into fall. Despite the S&P 500’s current calm, the VIX historically reaches its annual high-water mark in late September or early October. Given the relatively low starting point of the fear gauge and various looming macroeconomic event risks, an increase in market instability and thus, the VIX, remains a distinct possibility.

Yet, for astute investors, periods of increased volatility can often herald significant opportunities. The final quarter of the year, particularly the October to December timeframe, has historically proven to be a period of above-average returns for the equity market. Since 1950, the S&P 500 has generated an impressive average annual gain of 4.2% over these three months, finishing higher in 80% of those years.

Ultimately, while September may live up to its reputation for potential turbulence, a comprehensive investment strategy must weigh seasonal patterns against prevailing market trends, economic indicators, and broader corporate health. When the market demonstrates strong upward momentum, historical seasonal weakness may be less of a decisive factor. Moreover, any potential drawdowns during September could simply set the stage for a resilient and profitable fourth quarter.