Recent record aside, September has a volatile history

Since 1950, September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971) and Russell 1000 (since 1979). Back-to-back gains in September 2012 and 2013 have lifted Russell 2000 to third worst (since 1979). September was creamed four years straight from 1999-2002 after four solid years from 1995-1998 during the dot.com bubble madness. Although September’s overall rank improves modestly in midterm years going back to 1950, average losses widen for DJIA (–1.0%), NASDAQ (–0.7%) and Russell 1000 (–1.0%). S&P 500’s average September loss improves slightly from –0.5% to –0.3% in midterm years. Small-caps perform best, eking out an average 0.1% advance. Although September 2002 does influence the average declines, the fact remains DJIA has declined in 10 of the last 16 midterm-year Septembers.

Although the month has opened strong in 13 of the last 19 years (a fading trend as S&P 500 has been down four of the last six first trading days), as tans begin to fade and the new school year begins, fund managers tend to clean house as the end of the third quarter approaches, causing some nasty sell offs near month-end over the years. Recent substantial declines occurred following the terrorist attacks in 2001 (DJIA: –11.1%), 2002 (DJIA –12.4%), the collapse of Lehman Brothers in 2008 (DJIA: –6.0%) and U.S. debt ceiling debacle in 2011 (DJIA –6.0%). However, September is improving with S&P 500 advancing in eight of the last 10 Septembers and DJIA climbing in seven.