Since 1950, September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971) and Russell 1000. A 3.1% advance last September lifted Russell 2000 to second 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 post-election years going back to 1953 (third or fourth worst month depending on index), average losses widen to 0.9% for DJIA, SP 500 and NASDAQ and to 1.6% for Russell 2000. Although September 2001 does influence the average declines, the fact remains DJIA and S&P 500 have declined in 9 of the last 15 post-election year Septembers.
Although the month has opened strong 12 of the last 18 years (a fading trend as S&P 500 has been down four of the last five first trading day), 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 selloffs near month-end over the years. Recent substantial declines occurred following the terrorist attacks in 2001 (Dow: -11.1%) and the collapse of Lehman Brothers in 2008 (Dow: -6.0%). Solid September gains in 2010; DJIA’s 7.7%, S&P 500’s 8.8% were the best since 1939, but the month suffered nearly the same magnitude declines in 2011. September has been a rather volatile month.
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By Jeffrey A Hirsch and Christopher Mistal