Historically, the 9th month of the year hasn’t been kind to investors.
“April is the cruelest month,” wrote poet T.S. Eliot—who, we assume, didn’t own stocks.
History tells us that September has a well-established track record of treating equity investors poorly. The chart shows that the first month of fall tends to deliver far and away the worst returns of any month of the year. While the chart summarizes the average monthly returns since 1928, this pattern has also held over the past five, ten, and 20 years.
None of this means a down month in September is a sure thing—if only investing were that easy! Still, recent history isn’t on investors’ side: The S&P 500 has suffered a negative return in September of 2020, 2021, and 2022 (down -9.3%, -4.8% and -3.9%, respectively).
As we move into the ninth month of 2023, however, there are some signs of hope that the market could buck its historical trend:
- The S&P 500 last week climbed back above its 50-day moving average (one measure of market momentum).
- The labor market participation rate recently hit a post-pandemic recovery high as more people enter the labor force.1
- Job growth overall continues to slow modestly, making the sought-after economic “soft landing” more likely.2
Of course, incoming data will largely dictate the market’s direction—particularly inflation and labor market data. Our tactical approach to asset allocation should enable us to opportunistically shift portfolios’ exposure as necessary based on what we view as new developments while helping to keep investors “on plan” during market uncertainty.
Disclosures
1 FRED®, August Labor Force Participation Rate
2 August Jobs Report: US Job Growth Forges On, The New York Times, September 1, 2023.
This commentary is written by Horizon Investments’ asset management team.
Past performance is not indicative of future results.
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