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It’s the worst September for stocks since 2002. What that means for October.

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September is traditionally the toughest month for stocks, but this one is shaping up to be the worst since 2008, during the bleak days of the financial crisis. Seasonally inclined investors may wonder what that means for October.

Dow Jones Market Data took a look at how equities have done in the wake of past particularly brutal Septembers.

But first, how does the current month stack up? Through Thursday’s close, the S&P 500
SPX,
-1.51%
,
down 7.95%, and the Nasdaq Composite
COMP,
-1.51%
,
down 9.1%, were on track for their worst September performances since 2008. The Dow Jones Industrial Average
DJIA,
-1.71%
,
down 7.25%, was set for its worst September since 2002.

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Sample size is limited. Not counting the current month, the S&P 500 has seen a September decline of 7% or more 11 times, according to data going back to 1928. The Dow has dropped 7% or more in September 13 times based on data back to 1928. The Nasdaq Composite has suffered a fall of 9% or more in September six times going back to 1986.

Dow Jones Market Data found that in Octobers that follow a 7% or larger fall in September, the S&P 500 rises 0.53% on average in October and sees a median gain of 1.81%. That’s better than the average for all Octobers at 0.47% and the median at 1.03%. October is positive in years following an outsize September loss 54.55% of the time, versus 57.45% for all Octobers (see table below).

S&P 500

Category

7% or worse

All

Average

0.53%

0.47%

Median

1.81%

1.03%

Worst Performance

-16.94%

-21.76%

Best Performance

16.30%

16.30%

% of October’s higher

54.55%

57.45%

Dow Jones Market Data found that in Octobers following a September drop of 7% or more, the Dow has seen an average fall of 1.51% and a median drop of 1.46%. That compares with an average rise of 0.37% for all Octobers and a median gain of 0.79%. The S&P 500 has risen 46.15% of the time in Octobers that follow a 7% or more September decline, versus a rise 57.6% of the time for all Octobers (see table below).

DJIA

Category

7% or worse

All

Average

-1.51%

0.37%

Median

-1.46%

0.79%

Worst Performance

-20.36%

-23.22%

Best Performance

10.60%

10.65%

% of October’s higher

46.15%

57.60%

And here are the numbers for the Nasdaq in October following a September drop of 9% or more:

Category

9% or worse

All

Average

2.19%

0.73%

Median

4.26%

2.16%

Worst Performance

-17.73%

-27.23%

Best Performance

17.17%

17.17%

% of October’s higher

50.00%

54.90%

Since 1950, September has been the worst performing month of the year for the Dow Jones Industrial Average, S&P 500 and Russell 1000 and the worst for the Nasdaq Composite since 1971 and the small-cap Russell 2000 since 1979, according to the Stock Trader’s Almanac.

Stocks turned lower in choppy trade on Friday afternoon, with the Dow down 200 points, or 0.7%, while the S&P 500 drifted down 0.3% and the Nasdaq lost 0.1%.

The Dow’s September drop is shaping up to be its biggest monthly decline of 2022. September’s drop for the S&P 500, however, is on track to be the worst monthly decline since June, when it fell 8.4%, according to FactSet. The S&P 500 dropped 8.8% in April. The Nasdaq saw a fall of more than 13% in April.

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