“The way I see it, if you want the rainbow, you gotta put up with the rain.” Dolly Parton
First off, many of my best childhood memories were taking vacations down to the Smokey Mountains. Gatlinburg, Pigeon Forge, and Sevierville all share a special place in my heart. Dolly was a legend for so many reasons, but if you’ve ever been to that part of our country, you know she was bigger than a legend. I’m by no means a country music fan, but I’m a Dolly fan. RIP to one of the best, and her quote above sums up many things, not just in investing, but in life.
The Worst Month Is Here
Get ready to hear this a lot, but September is, historically, the worst month of the year for the S&P 500, down 0.6% on average and higher only 45% of the time. Both are the lowest out of all 12 months. February is the only other month with a negative average return, and no other month is higher less than 50% of the time.
Not only is September the worst month since 1950, but it’s also the worst month over the past 10 years, the worst month over the past 20 years, and the third-worst month in a midterm year (only January and June are worse).
But just as August historically isn’t a strong month and yet we are looking at a solid return, there are some clues that this year could buck the bearish trend and that this month isn’t one to fear.
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The Trend Is Your Friend
Some of the very worst September returns ever took place during weak markets, but this year the S&P 500 is up close to 13% for the year and a good day or two away from new highs. In fact, the four worst Septembers ever saw the S&P 500 down year to date heading into the month, and down at least double digits each time. Only one out of the 10 worst Septembers ever saw stocks higher for the year heading into September.
Building on this, looking at the 10 best September returns ever shows that seven of them saw a positive return heading into them. With stocks up close to 13% so far in 2026, this could be a clue that a large drop this September isn’t likely.
August Is the Clue?
Could the strong yearly return so far, along with a solid August, be another clue? It very well could be.
We found 11 other times August was higher while the S&P 500 was up for the year between 10% and 17.5%, so a solid year, but not a super strong year. September was higher six out of 11 times here, with a solid median return of 1.2%. But it is the rest of the year that really caught our attention. The final four months gained 10 out of 11 times, with a very strong 5.6% average return.
Third Time’s the Charm
The S&P 500 gained 2.0% and 3.5% in September the past two years. Only once in history has it gained more than 2% three years in a row, and that was a record four years in a row in the late 1990s. Could this year be three in a row? We think there is a better chance of this than most think.
Thanks, as always, for reading what our team has to say; it truly means a lot to us. I had the honor of joining Dom Chu on CNBC’s Morning Call on Friday to discuss September. You can watch the full interview below.
For more content by Ryan Detrick, Chief Market Strategist, click here.
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