September, The Market’s Most Feared Month, Could Be A Golden Opportunity

It’s common knowledge that September has historically been a challenging month for stocks, regardless of the timeframe. Since 1928, the S&P 500 has closed down 52 times in September, more than in any other month, according to Yardeni Research. Looking at monthly returns over the past 30 years and five years, equities have had the worst performance during September, dipping 0.34% and 2.89% on average, respectively.


Even though past performance doesn’t guarantee future results, investors should prepare for continued market volatility this month.

At the same time, a close examination of economic indicators and market trends suggests that September could tee up some strategic investment opportunities.

The Recession Narrative Appears To Be Fading

As optimism cautiously returns to Wall Street, new data suggests that fears of an impending recession are receding among some S&P 500 companies.

FactSet reports that significantly fewer S&P 500 companies mentioned “recession” during their second-quarter earnings calls compared to previous quarters. Only 62 companies cited the term, marking a 45% decline from the March quarter and the lowest number since the final quarter of 2021.

A recent study of the economic impact of higher rates offers some context that may help explain companies’ newfound optimism. According to the findings of the Federal Reserve Bank of Chicago, most of the Fed’s rate-hiking policy has already been felt in the broader economy. The labor market will feel a slower impact, with more than half of the total effect on hours worked yet to materialize. However, the report’s authors predict that the existing policy measures should be sufficient to bring inflation close to the Fed’s 2% target by mid-2024—all without triggering a recession.