From CNBC: 2024-09-13 14:11:24

Historically, September has been unkind to stock investors. Since 1926, U.S. large-cap stocks have lost an average of 0.9% in September. It’s the only month with a loss in that time period, with July boasting a 2% average return. Recent data shows S&P 500 has averaged a 1.7% loss in September since 2000.

Despite September’s poor performance, experts advise against trying to time the market. The top 10 trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions. Large-cap U.S. stock returns have been positive in September for half the years since 1926.

Investors shouldn’t blindly follow market maxims like “sell in May and go away.” Fidelity Investments points out that stocks often record gains throughout the year. Since 2000, the S&P 500 gained 1.1% from May to October, on average, compared to 4.8% from November to April.

Historically, September’s stock market weakness can be traced back to 19th century banking practices.

Experts view September’s usual market downturn as being more tied to investor psychology rather than fundamental data or market indicators. The selling may relate to tax considerations as mutual funds tend to sell stocks at the end of the fiscal year._uncertainty surrounding the U.S. presidential election in November and the Federal Reserve policy meeting next week may add to September’s challenges.

Investor psychology likely plays a big role in September’s stock market weaknesses. The narratives of a weak September stock market may feed on themselves, instilling uncertainty in investors. Experts suggest that mutual funds may be pulling forward their tax-oriented selling into September, contributing to the downward pressure on stocks.

Read more: Why stocks drop in September — and many investors shouldn’t care