September’s Bad Reputation Is Real — But the Risk Isn’t the Average

Investors return from Labor Day weekend to the one month on the calendar that has never earned their trust. Research firm Argus put numbers behind that instinct in a market outlook published September 1, and the findings are more nuanced than the folklore suggests. September is indeed the only month that shows a negative average return for the S&P 500 going back to 1980. However, the average conceals the real story: September does not grind lower so much as it occasionally breaks.

Notably, Argus is not telling clients to sell. The firm tags the note Bullish on a short-term basis even while warning investors to brace for volatility. That combination — stay invested, expect turbulence — sets the tone for the month ahead.

Key Points

• September is the only month with a negative average S&P 500 return since 1980, shedding 0.9% on average, according to Argus.
• The month’s “win percentage” is 48% — close to a coin flip, not a reliable decline.
• Tail events drive the average, including drops of 13.6% (2008), 11% (2002) and 9.3% (2022).
• Four catalysts make September volatile: post-Labor Day repositioning, a reopening IPO window, a Federal Reserve meeting, and the start of third-quarter pre-announcement season.
• Argus rates the near-term outlook Bullish, framing September risk as episodic rather than directional.
• Small caps carry the sharpest exposure, because sector-wide selling on a single pre-warning hits thinly covered names hardest.

The Average Hides the Real Risk

Argus analyzed monthly S&P 500 returns back to 1980 and found September averaging a 0.9% loss — the only month in the red. Yet the firm immediately qualifies the figure. September finishes higher 48% of the time, and last year it gained 2.9%, its strongest showing in more than a decade and its second consecutive advance after four straight declines.

Consequently, the average tells investors less than the distribution does. Argus points to a cluster of severe outcomes: 2008 (-13.6%), 2002 (-11%), 2022 (-9.3%), 1986 (-8.5%), 2001 (-8.2%), 2011 (-7.2%) and 2021 (-4.8%). Those seven months, not a persistent monthly drift, produce the negative average. In other words, September is where the market’s fat left tail tends to live.

Four Reasons the Month Turns Volatile

Argus describes September as a transition month and identifies four specific pressure points.

First, trading desks re-engage after the August doldrums, and corporations return to full speed following Labor Day. Second, the IPO market typically reopens, adding fresh equity supply. Third, the Federal Reserve meets, which reliably injects volatility into rate expectations. Fourth — and most consequential — third-quarter pre-announcement season begins.

That fourth driver deserves the most attention. By late in the quarter, management teams know whether they will hit their financial targets. When they pre-warn, investors rarely punish the single offender. Instead, they sell the entire sector. Seasonality is the correlation; pre-announcement risk is the mechanism.

What Argus Sees Moving Markets Today

The firm’s same-day market scan splits evenly, though the negatives are the macro ones. Global shares traded lower, while yields and crude oil jumped on Middle East tension following strikes on two oil supertankers near the Strait of Hormuz. On the positive side, Novartis AG (NYSE: NVS) advanced on clinical trial results, and Robinhood Markets (NASDAQ: HOOD) climbed on new product launches and AI enthusiasm.

Meanwhile, the 10-year Treasury yield reached its highest level since January 2025, and Federal Reserve Governor Michael Barr said the central bank should raise rates if inflation fails to moderate. Argus attached the outlook to its coverage of APA Corporation (NASDAQ: APA), on which the firm maintains a Bullish rating.

Why Small-Cap Investors Should Read This Differently

For emerging-growth investors, the pre-announcement dynamic matters more than the headline statistic. Small- and micro-cap companies carry thinner analyst coverage and lower liquidity, so a sector-wide repricing triggered by one large-cap warning can drag down names that never reported anything at all. The Russell 2000 has already lagged this week.

At the same time, Argus’s second driver cuts the other way. A reopening IPO window signals renewed appetite for new equity — a constructive backdrop for private companies preparing to list and for the capital-markets ecosystem that supports them.