September has traditionally been the worst month for U.S. stocks, but 2024 is bucking that trend.
While September is known for the start of school and football season, it also has a notorious reputation for dragging down the stock market. Historically, the S&P 500 has averaged a loss of 1.2% during the month, making it the worst period for stocks, according to Dow Jones Market Data. However, this year tells a different story. As of the latest data, U.S. stocks are on pace for a September gain for the first time since 2019.
In recent years, September has been particularly harsh. The S&P 500 dropped nearly 5% in September 2023 and more than 9% in 2022. Yet, this year, the S&P 500 is up 1%, with the Dow Jones gaining 1.6% and the Nasdaq Composite rising 1.5%, according to Dow Jones data. These figures position the indexes for their strongest September in years.
The Federal Reserve’s recent 50-basis-point interest-rate cut has played a crucial role in calming investor nerves, helping boost market sentiment. According to Thomas Martin of GLOBALT Investments, this Fed easing cycle has been instrumental in supporting the rebound.
While stocks have rallied for most of 2024, the market has faced turbulence, with sharp declines in early August and September. Concerns about a potential economic slowdown, along with a sharp unwinding of the Japanese yen carry trade, triggered a significant selloff. Still, with the Fed’s intervention, the market has managed to recover.
Looking ahead, some volatility may still be on the horizon, especially with the upcoming U.S. presidential election, which could introduce short-term uncertainty. Additionally, traders are closely watching key economic data, including GDP growth and inflation reports, to gauge the health of the economy and how it may impact the stock market.
While the origins of the “September Effect” remain unclear, many believe it stems from increased trading volume following the summer lull or from funds rebalancing their portfolios. Still, this year’s September seems to be defying the odds, setting a positive tone as investors head into the final quarter of the year.gust, a 50-basis-point interest rate cut by the Federal Reserve helped restore investor confidence, pushing the S&P 500, Dow Jones, and Nasdaq Composite higher. With gains of 1% or more so far, this could be September’s best performance since 2019.
Despite recent volatility, including fears of economic cooling and the potential for further market swings, analysts are optimistic.
The Federal Reserve’s intervention has provided much-needed support, though future data releases on GDP, inflation, and jobless claims could influence whether these gains hold. Although challenges remain, the trend suggests that this September could avoid the market “bloodbath” of previous years.
As the month progresses, investors will keep an eye on economic data and election-related volatility, which could still introduce short-term risk. However, with corporate earnings projected to grow in 2025, the long-term outlook for stocks remains promising.
This September, the market seems ready to defy its historically dismal reputation.
