September's Not the Dip You Think It Is

On Wednesday, the Federal Reserve raised rates by 25 basis points, flagging more hikes ahead. The S&P 500 (SPX) closed that Friday at 7,650.50.

You could build a case that the timing is unkind. September is, by one measure or another, the worst month for stocks. If you've been told to buy the dip, a pullback in September should look inviting.

Except the math on that move doesn't work out.

September is the only month of the year with a negative average return. Since 1928, the S&P 500 has declined by roughly 1.13% in September on average, according to Yardeni Research — the worst of any calendar month. It's gone down 55% of the time, the only month where the losing count edges past the winning one. Since 1945, the average is -0.6%, per CFRA data.

Now, -0.6% isn't terrifying. The distribution is lopsided because of a handful of big-down years. September 2022 dropped 9.3%. September 2021 fell 4.8%. Strip those out and the median loss is much milder. September loses more often than not, but the typical loss is small.

Here's the catch that makes the September effect less useful as a trading guide than it sounds. October and November historically bounce back hard after a weak September — they account for two of the strongest calendar months by average return. The trough-and-rebound pattern means a September buyer who sticks around still captures the recovery. But if you're measuring only the month itself, September's streak of down outcomes is real, if shallow.

What's also worth noting about this particular September: the market has logged 23 new all-time highs so far in 2026 alone, according to Creative Planning's Charlie Bilello. The index has posted more than 1,300 all-time highs since 1957 — averaging more than once a month. A record is not a flashing sell sign. It's what a market that keeps compounding looks like on its way up.

This year's rally has been broad rather than carried by a handful of mega-caps, and the earnings backdrop is healthier than it's been in a while — the kind of foundation that tends to hold up better under pressure.

Put together, the census looks like this: September has gone down more than half the time since 1928, by a small amount on average. A rolling ten-year period in the S&P 500 has never produced a negative return since 1928. None of that means you should be out of the market. But if the idea is to treat September as the optimal month to buy the dip, the history doesn't confirm it. It confirms September as the month that loses slightly more than half the time, by a fraction of a percent. The record for the dip-buyer is neither heroic nor alarming.

Which is the right way to read a 0.6% gap. Go figure.