The S&P 500 fell 4.6% in September as high interest rates and consumer credit woes forced the market into its annual September tumble. Day after day the market seemed unsure of itself as most early morning gains were reversed during the afternoon trading sessions as reality set in.
Historically, September is the worst trading month of the year for the benchmark index and that is likely due to a combination of factors like:
- Seasonal portfolio changes to cash in at summer’s end and get ready for Q4 which represents the most profitable quarter of the year.
- Share selling to prop up cash balances to spend on birthdays and weddings as September hosts the most birthdays and weddings of the year.
- Market participants expect a decline in September so they lighten their equity positions in the first half of the month.
See below for the S&P 500’s average monthly returns since 1945:
