While August has proven to be a winning month for Wall Street, historical trends suggest that September could present a significant challenge for stock traders. According to the 2026 Stock Trader’s Almanac, compiled by Jeffrey Hirsch and Christopher Mistal, September ranks as the worst-performing month across all major U.S. stock indices over the past decades. The Dow Jones Industrial Average has historically declined by an average of 0.8% in September since 1950, while the S&P 500 has fallen by an average of 0.7% over the same period. The technology-heavy Nasdaq Composite has dropped an average of 0.9% during the month since 1971, and the small-cap Russell 2000 has fallen by an average of 0.8% since 1979.
.RUT 1M mountain Russell 2000 one-month.
“Portfolio managers back after Labor Day tend to clean house in September,” Hirsch and Mistal write in the almanac. “The S&P opened strong in 18 of the last 30 years but tends to close weak due to end-of-quarter mutual fund portfolio restructuring.”
If historical patterns hold true this year, September will mark a sharp reversal from August, during which the S&P 500 rose more than 2% and the Dow gained over 1%. Adding to market uncertainty, the upcoming U.S. midterm elections in November may introduce increased volatility in the coming months. “Mid-term election years have historically brought volatility in September and October,” noted JC O’Hara, chief technical strategist at investment bank Roth, in a Sunday client note. “We are currently seeing rotation into sectors that lagged over the first half of 2026, which we believe reflects defensive posturing heading into the fall.”
Despite the seasonal headwinds, the S&P 500 reached multiple all-time highs in August, propelled by robust corporate profits. Pre-tax corporate profits surged to $4.8 trillion in the second quarter, representing 18% of national income—the highest share since at least 1950.
August also featured a highly anticipated second-quarter earnings report from Nvidia, a central player in the ongoing computing sector investment push. Although the company raised its revenue guidance beyond Wall Street expectations, it also reported a significant increase in accounts receivable alongside a corresponding decline in free cash flow.
Looking ahead, financial markets must contend with the possibility of escalating tensions between the U.S. and Iran in September, alongside persistently elevated price levels. The U.S. and Iran engaged in hostilities for the first time in over a month, with the U.S. striking targets on Iran’s Larak Island and Iran retaliating with fire on U.S. targets in Jordan.
Compounding these geopolitical concerns, the personal consumption expenditures (PCE) price index rose by 3.7% in July, nearly double the Federal Reserve’s target of 2%. Although slightly higher than expected, the headline figure is down from the recent peak of 4.1% in May. Meanwhile, West Texas Intermediate crude oil climbed to $86.79 per barrel on Monday, marking the highest level since August 21, when WTI peaked at $87.51.
