The September stock market scaries reared their head on day 1 — will the pattern hold?
September has statistically been the stock market’s weakest month, across decades and even across borders.
When Green Day sang “Wake Me Up When September Ends” in 2004, they were obviously talking about the stock market anomaly that’s bugged researchers and investors for years: that the ninth month of our calendars has statistically been the stock market’s weakest, across decades and even borders.
With day 1 of September 2025 now in the books, the month might already be living up to its reputation, as the S&P 500 slipped 0.7% on Tuesday, dragged lower by high-flying AI names hitting the brakes.
Indeed, over the past 45 years, September has been the only month when the S&P 500 Index has averaged a loss. While it’s one thing to know September is weak on average, it’s another to see how often the month really goes south.
In the last decade alone, six Septembers have ended in the red, with four of the past five being especially rough. That includes a 9.3% plunge in 2022 — deeper than the drop seen in 2008 — when the Fed’s aggressive rate-hiking campaign in a bid to quell surging postpandemic inflation rattled investors.
Why September tends to be weak is maddening. Intuitively, it shouldn’t matter what month it is — but the phenomenon has been found to hold back to the 1930s. Various theories have been posited, starting with the seasonal moves that can add to selling pressure. Fund managers, for instance, sometimes clean up their portfolios before fiscal year-end in September and October, while some investors start early on selling losers to shrink their tax bill.
One academic study pointed to “post-holiday blues”: when trading slows during summer breaks, bad news isn’t fully priced in, and markets adjust lower once investors return in September. Others have suggested that fewer hours of daylight could affect our moods, or that IPO seasonality could play a role, with bankers bringing more stocks to market after the summer lull to test investor appetite for equities. Pop psychology could add another layer — if many brace for a drop, it could be enough to spark a real drop on any hint of bad news.
And it’s not just on Wall Street: researchers found similar patterns across 47 countries, with average stock returns ~1% lower in the month following major school holidays. In fact, per RBC’s analysis, markets in Canada, the UK, and Hong Kong have all stumbled in September over the past five decades.
Of course, seasonal influences are only ever going to be very marginal, at most. If the economy roars, inflation cools, AI makes a breakthrough, and geopolitical tensions abate, expect stocks to soar no matter what the calendar says.
