The snapshot below is pulled from last Friday’s Bespoke Report newsletter.  Read the entire report with a two-week free trial to any membership level.

Historically, September has been the worst month of the year for the US equity market.  But further research into the historical numbers shows that investors may not need to be as concerned about this September.

In the chart below, we show the S&P 500’s average percentage change in the month of September and from September through year end based on a number of performance-related scenarios.

For all years since 1928, the S&P has averaged a decline of 1.05% in September, and the index has averaged a gain of 1.81% from September through year end.

In years when the S&P 500 is up YTD through August (it’s up ~8% this year), however, the S&P has actually averaged a gain of 0.20% in September, and a gain of 3.38% from September through year end.  When the index has been up more than 5% YTD through August (as it is this year), the average change in September has been positive again at +0.36%, and the rest-of-year gain is +4.51%.

It’s the years in which the S&P has been down YTD through August that September has been ugly.  When the S&P has been in the red through August, September has seen an average decline of 3.43%.  When the index has been down 5%+ YTD through August, September has averaged a decline of 3.78%.

Finally, when the S&P has been up during the summer months (May through August), September has been positive as well, averaging a gain of 0.29%.  The May through August period this year saw the S&P gain more than 9% for its best summer since 2009.  When the S&P has been down during the summer months, the S&P has averaged a decline of 3.23% in September.

While September has indeed been the worst month of the year for stocks, the negativity usually comes during years when the market is already struggling entering the month.  That’s simply not the set-up in place this year.

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