Despite major indexes still trending bullishly and hovering near record highs, JPMorgan's technical strategist Jason Hunter advises investors to consider selling some stocks. The bank's technical analysis of the S&P 500 and other US market segments indicates several signals suggesting potential seasonal weakness. Hunter noted that while there aren't "any clear warning signs" from the overall bullish trend, market internals and shifts in leadership point to upcoming concerns. This aligns with historical trends, as the August to October period is often the worst-performing three-month stretch for the market.
Historical data underscores this caution. According to Bank of America, dating back to 1928, the S&P 500 has seen an average loss of $0.02 during the August-October period, with the average correction in down years being $7.35%. Specifically for September, it is historically the weakest month for equity returns. Over the past 50 years, the S&P 500 has lost an average of $0.7% in September, with gains occurring only 46% of the time. Returns have varied widely, from an $11.0% loss in September 2002 to an $8.8% gain in September 2010.
However, some analysts offer a contrasting view. Ryan Detrick, chief market strategist at Carson Group, suggested that September's reputation as the worst month for the S&P 500, dating back to 1950, primarily holds true when the market enters the month weakly. He argues that this year is different, with a strong August showing nearly 70% of S&P 500 stocks above their 200-day moving average, indicating broad participation. Matt Powers, managing partner, added that earnings are robust, with ten out of eleven sectors experiencing double-digit earnings growth, the strongest since the third quarter of 2021. The 10-year Treasury yield, at $4.67% on August 27, 2026, near its yearly high, presents a potential caveat. Additionally, the market is awaiting signals from Fed Chair Kevin Warsh's appearance at Jackson Hole, particularly concerning September rate-cut odds, as the federal funds upper bound has been at $3.75% since December 11, 2025.
Despite the historical weakness of September, some experts advise against panic selling. The S&P 500 has returned an average of $13.4% in the 12 months following a record high between 1988 and 2023, compared to the overall average of $11.9% for all 12-month periods. An average decline of $1.17% in September may not warrant selling, especially considering potential tax implications and the risk of missing out on significant gains if unexpected positive news, such as developments in the Iran war, inflation, or tariff uncertainty, drives the market higher. Instead, strategies like continuing automatic contributions, preparing a list of stocks to buy if prices drop, and rebalancing portfolios are recommended. Historically, stocks have been less likely to rise in September (43% of the time) compared to other months (60% of the time), but exiting the market based solely on historical trends can lead to missed opportunities, particularly if the market remains strong.
