As August ends, the S&P 500 faces a historically challenging month ahead. Since 1928, September has been the worst month for the benchmark index, often resulting in negative returns. Data from CME Group shows that over the past century, the S&P 500 has declined in 55% of Septembers. Recently, the index has dropped for the past four consecutive Septembers, according to Deutsche Bank.
A key factor is the surge in trading volume as Wall Street returns to full activity post-Labor Day. Liz Young Thomas of SoFi notes that the S&P 500’s monthly trading volumes jump from an average of 15.2 billion shares during the summer to 17.2 billion in September, which can lead to increased market volatility. She mentions that September often experiences significant market swings, with 2% moves being typical. This volatility is characterized by more frequent downside than upside movements.
This September could be particularly volatile due to upcoming events, such as the Federal Reserve’s policy meeting on September 18. While interest rate cuts are generally seen as positive for markets, their impact this time may depend on the August jobs report due out on September 6. A weaker jobs report might prompt the Fed to cut rates further, potentially signaling economic weakness.
Beyond September, market volatility could continue due to election concerns, peaking in mid-October during election years. However, this is often followed by a relief rally once the election results are clear, according to SoFi’s Young Thomas.