Diane Alter: We have two charts to show you how stocks do in September, with the rumblings of how this is the worst month for stocks…
True, September has by far been the nastiest month for the Dow Jones Industrial Average (INDEXDJX:.DJI) over the last century, with an average loss of 0.8%. That compares with an average gain of 0.8% in the other 11 months. Since 1929, the Dow average performance for September has been a 1.24% loss (see the following chart).
The S&P 500 Index, meanwhile, has ended the month with an average loss of 0.5% since 1950.
September’s ominous reputation tends to drive some short-term traders to pare down their stock portfolios as the month approaches, or at least to remain guardedly on the sidelines sitting on cash they have accumulated.
Concerns for a September swoon have intensified this year because more than three years have passed without a market correction (a decline of at least 10%). The historical average is for one correction occurring about every 12 months.
Also currently weighing on investor sentiment are mounting geopolitical tensions, the ailing Eurozone economy, and prospects of higher interest rates stateside.
But over the last several years, September has actually been good to investors. Over the last five years, the S&P 500 and Dow have been up 2% on average.