Is The Old Market Saying, “Sell Before September” A Myth For Dow Jones, Nasdaq, S&P 500? Why This One Month Is Weakest For Wall Street?

The US stock market extended their selling pressure for the second consecutive session this week on September 1st, which is also a bearish start to the new month. The Dow Jones is currently struggling below 53,000 mark, while the tech-heavy index, Nasdaq hovers around 26,250. The S&P 500 index, meanwhile, is trying to retain above 7,650 zone. The September in particular has historically been the weakest month for all three indices. Considering the severity of geopolitical impact on global economy for a longer duration alongside sticky inflation and tightened monetary policy case, the US stock market is facing stronger treasury yields and elevated oil prices.

This makes us wonder if history of September will repeat for Wall Street in 2026 as well, or a case of bulls is just awaiting to led off the leash for fresh gains.

Let’s us first understand, why September has been a challenging and weak month for Wall Street.

US Stock Market In All Septembers For Past 25 Years:

Over the last 25 years, September has broadly been bearish for US stock market. The average performance of this month for 25-years is weakest for Nasdaq at (-1.33%) followed by S&P 500 with -1.16% and Dow Jones with -1.09% downside.

In the past 25 years, Dow Jones has seen 12 positive Septembers and 13 negative Septembers. While S&P 500 has it in reverse with 13 positive Septembers and 12 negative ones. On the other hand, Nasdaq has both 12 positives and negatives each in September with just flat moment.

The best September for Wall Street was seen in 2010, that is 15 years ago, with Dow Jones rising 7.7%, S&P 500 gaining 8.8% and Nasdaq outperforming with 12% upside. But the worst Septembers were seen in 2001 and 2002.

The worst September for Nasdaq was in September 2001 where it crashed by 17% followed by another 11% downside in 2002. While the worst September for Dow Jones and S&P 500 was in 2002 where they crashed 12.4% and 11% respectively.

The most recent bearish Septembers that Dow Jones, S&P 500 and Nasdaq faced was between 2020 to 2023 during the Covid-19 pandemic.

The performance so persistent that the saying, “Sell before September”, has become a common old market advice. Why is September been the weakest month for decades, has no clear answer. It can either be a myth, told so often, that it has become a part of real practice in stock market. Or there is solid explanation?

Why Is September The Weakest Month For Stock Market?

Let’s start with basic! Denys Liutyi, Economic Expert at Macrobond explains if we take the monthly returns of the S&P 500, split them into calendar months and calculate the long-term average return for each month separately: all Januaries together, all Februaries together, and so on.

Then the plot result will reveal: September as an outliner. The economic expert said, “Its average return is negative. Not just slightly negative, but below -1% on average over the full historical sample.”

“But of course, a simple arithmetic average on its own does not prove very much. A few unusually bad Septembers could be enough to drag the figure down. That is why it makes sense to look at other measures as well,” Liutyi said.

Hence, instead of the average, Liutyi suggests to use the median return, which is less affected by the extreme years. He added though, ” We can also use a trimmed mean that excludes the strongest and weakest observations. Yet the result hardly changes. September remains negative, whichever approach we use.”

Is September Mania Limited To US Market Or Globally?

A comprehensive data of Macrobond reveals that September is by far the worst month for global market either be MSCI World, S&P 500, Russell 2000, DAX 40, FTSE 100, or S&P/ASX 200 and Nikkei 225. The best month bullish month has turned out to be either November or December for majority of indexes.

Why does the September effect exist at all? Liutyi said, “The short answer is that nobody really knows.”

Despite decades of research, Liutyi explains that there is no single explanation that most academics or investors would agree on.

But one of the most common theories points to the mutual fund fiscal year, which historically ended on October 31 for many U.S. funds. He said, “Under this view, portfolio managers may sell losing positions in September to “tidy up” their portfolios before reporting them to clients.”

“The problem is that the September effect is not unique to the United States. Similar patterns can be found across many international markets, including those with fiscal calendars that have little in common with the U.S,” the expert added.

Will September 2026 Become Bear Or Bull For US Stock Market?

“We remain constructive on US equities. But the setup that carried the market through August is changing, and the near-term asymmetry has shifted,” said Scott Rubner, Head of Equity and Equity Derivatives Strategy at Citadel Securities.

Scott who remained constructive through the summer, said, “much of that view has played out.” Earnings were exceptional. The July reset cleaned up leverage and positioning. Retail returned. Volatility collapsed. Systematic investors rebuilt exposure, and equities recovered. Since the March 30 low, the S&P 500 has rallied approximately 22%, adding roughly $12 trillion in market capitalization in just five months.

However, the strategist added, “September presents a different setup.”

Explaining in detail, Scott said, the earnings tailwind is largely behind us just as the calendar turns decisively back toward macro. Retail and corporate demand remain supportive, but both historically fade through September.

Also, much of the systematic capacity created by the July reset has already been redeployed. Volatility has compressed substantially. Downside protection is inexpensive.

“And we are entering the weakest seasonal window of the year,” added Scott, “This is not a change in our longer-term constructive equity view. It is a change in the near-term risk/reward.”

Accordingly, Scott views September as a tactical downside window.

He said, “For the first time since the July reset, I would rather use strength to reduce some exposure and add inexpensive protection than chase the market higher into this event window. I view September as a tactical downside window, not the beginning of a broader bearish turn.”

Currently, the Dow Jones is down by 427.36 points or 0.80% to trade around 52,758.54, at the time of writing on Tuesday. While the Nasdaq Composite index plunged by 236.82 points or 0.90% to trade around 26,134.07. Further, the S&P 500 index dropped by 52.20 points or 0.7% to trade around 7,633.94.

For the overall August month, all indices ended in green. The outperformer is Nasdaq for August 2026 with 456.99 points or 1.8% gains, followed by S&P 500 which surged by 85.64 points or 1.13% in the month. However, the DJIA index underperformed with a meagre 7.49 points or 0.01% gains.

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