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Sept. 14, 2019, 3:15 p.m. EDT

September is the worst month for stocks — and it’s even gloomier after a downbeat August

S&P 500, on average, falls 1% in September

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By Chris Matthews, MarketWatch


Getty Images
When the kids go back to school, stocks suffer

Stock market investors hate to see summer end, and it’s not because they fear shorter days or the back-to-school rush.

August is typically a weak month for stock market performance, and September is the only month that, on average, is worse for equity-market prices.

Since 1937, the average September performance of the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.77%  and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.80% is a 1% decline, while the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.73%  has seen an average fall of 0.5%, according to Dow Jones Market Data.


Dow Jones Market Data
Data on the Dow and S&P go back to 1937 and to 1973 for the Nasdaq

Such performance wouldn’t be welcome news for equity market investors, who suffered through a 1.7% August decline for the Dow, a 1.8% loss for the S&P and a 2.6% drop for the Nasdaq.These are the worst August performances for all three benchmarks since 2015.

And following an August when the S&P 500 has fallen more than 1.5%, the Dow performs worse, down 1.1% on average, while the Nasdaq has seen an average fall of 0.8%. The S&P 500 does a bit better than the average September following an August decline of 1.5% or more, falling 0.9%.

August has been an even worse month for small-and-mid-cap stocks, as the S&P Mid Cap 400 and S&P Small Cap 600 are on pace for its worst Augusts since 2011, underscoring the struggles of the typical public company that have persisted all year. The equal-weighted Value Line Geometric index /zigman2/quotes/210598430/delayed VALUG +0.52% , which tracks the typical performance of roughly 1700 publicly listed companies, has fallen more than 15% below its Aug. 29, 2018 highs, illustrating the bifurcated nature of today’s equity markets.

It’s not all bad news, however. According to a Friday analysis by LPL Financial, the past 15 times that the S&P 500 lost ground in August, the rest of the year saw positive returns every single time.


LPL Financial

So while September could prove to be a bumpy ride, recent history suggests the pain will not endure.

/zigman2/quotes/210599714/realtime
US : S&P US
3,120.45
+23.82 +0.77%
Volume: 1.82B
Nov. 15, 2019 4:04p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
28,004.82
+222.86 +0.80%
Volume: 281.41M
Nov. 15, 2019 4:04p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,540.83
+61.81 +0.73%
Volume: 2.01M
Nov. 15, 2019 4:04p
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/zigman2/quotes/210598430/delayed
US : ICE Gib Ind
534.70
+2.79 +0.52%
Volume: 0.00
Nov. 15, 2019 3:49p
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