Historically, the month of September represents the least favorable period for American stocks. The S&P 500 undergoes an average correction of 0.7% and closes higher in only 44% of cases since 1950. This seasonality is associated with high bond yields, an American public debt exceeding 40,000 billion dollars and questions about the profitability of investments in artificial intelligence this year. However, history does not directly predict a decline.
In brief
- September is historically the least favorable month for the S&P 500, with an average return of -0.7% since 1950.
- The technical context provides a counterpoint, with the index starting September well above its 200-day moving average.
- Rising bond yields are increasing pressure on valuations, with long-term US rates particularly high.
- The US federal debt exceeds $40,000 billion, fueling questions about financing costs.
- The massive spending on AI will be monitored, including its ability to generate expected revenue.
September shows negative average return since 1950
The significant underperformance of the main stock indices during the back-to-school month is designated “September effect”. This scenario mainly concerns the S&P 500, but also the Nasdaq, the Dow Jones and the Russell 2000.
Various interpretations are put forward. Following the summer decline in volumes, major managers are returning to the market and reassessing their positions. Several funds rebalance their portfolio, secure gains or reduce their exposure before the end of their financial year.
Some data allow us to measure this seasonal weakness:
- The S&P 500 has lost an average of 0.7% in September since 1950;
- The index ended the month up in only 44% of cases;
- September is the only month whose average return remains negative over this period;
- The declines also regularly concern the Nasdaq and the Dow Jones.
These averages do not constitute a market standard. Data designed and constructed over many decades combines various economic, monetary and geopolitical periods. It therefore does not confirm that September 2026 will end in the red.
A counterpoint is even provided by the technical context. The S&P 500 moved 2.6% during the month of August and begins September nearly 8.3% above its 200-day moving average. Since 1950, if the index begins the month above this threshold, its average return reaches 0.2% according to data reported.
Bond yields increase pressure on valuations
The main difference this year is linked to the bond market. Indeed, the yield on ten-year US Treasury securities is increasing around 4.7% while that on thirty-year bonds goes above 5%.
THE US Treasury statistics positioned these yields near 4.73% and 5.22%. These are securities that reveal low credit risk, although they remain exposed to rate fluctuations and inflation.
While bonds provide higher remuneration, investors usually demand additional yield to keep shares. This progression mechanically reduces the present value of the gains expected over several years. Growth companies are therefore more sensitive to a further increase in rates.
John Plassard, partner at Cité Gestion, underlines this difference in an on-chain analysis:
September will be less of a calendar test and more of a confidence test.
Now above 40,000 billion dollars, the American federal debt also consolidates questions. Government borrowing needs keep long-term yields high. This scenario increases the cost of financing for the State, companies and households.
Spending on AI will be particularly monitored
Technology companies are pouring significant amounts into chips, data centers and power grids useful for artificial intelligence. These expenses must still produce the income necessary to explain certain capitalizations.
A high cost of capital further disadvantages companies whose profits are expected in the long term. A likely correction would therefore take the form of a sectoral rotation rather than a global collapse. Investors would favor profitable companies with low debt and the ability to automatically generate cash flow.
The direction of the markets will depend on various time frames. Thus, the European Central Bank will make a monetary decision on September 10. On September 15 and 16, the Federal Reserve will meet. As for the Bank of England, it will announce its decision on September 17. US employment and inflation figures will also weigh on rate expectations.
The month of September 2026 therefore involves several risks, but its unfavorable history is not sufficient to announce a decline. Rising bond yields and central bank decisions will provide stronger guidance than seasonality alone.
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