Stock Market Pullback? Stormy September Seasonality is Here - Brace for Impact

September's seasonal turbulence hits markets—historical patterns suggest volatility ahead.

Timing the Tumble

Traditional equities face their worst calendar month, with average declines hitting investors right in the portfolio. No sector gets a free pass when seasonal headwinds blow.

Defensive Plays

Smart money rotates into quality assets—because nothing says 'prudent investing' like panicking along with everyone else when the charts turn red.

Opportunity in Chaos

Market pullbacks create entry points for disciplined investors. Meanwhile, the rest of us just refresh our brokerage apps and wonder why we didn't sell in August.

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Since 1950, September has been the worst month for the S&P 500 in terms of performance, according to Carson Group Chief Market Strategist Ryan Detrick. September has also been the worst-performing month in the past 10 and 20 years.

“We’re in a very dangerous spot,” said Universa Investments COO Brandon Yarckin. “It’s a difficult thing to navigate this market by owning diversifiers like bonds or hedge funds instead of being fully invested in stocks.” Bank of America’s Paul Ciana added that the market drops in September 56% of the time with an average loss of 1.17% since 1927.

Valuations and Inflation Readings Point to Potential Pullback

The S&P 500 is currently trading at an elevated forward P/E ratio of 23x while recent inflation readings and surveys have raised the risk of sustained higher prices. For example, the University of Michigan’s August year-ahead inflation expectations jumped to 4.8% from 4.5% in July. Additionally, the Commerce Department announced last week that the Core personal consumption expenditures (PCE) index rose to 2.9%, marking the highest rate since February.

On another note, participation from retail investors could start to cool down following a frenzy of buying. After strong performances in June and July, retail participation has historically slowed down in August before reaching a yearly-low in September, according to data from Citadel Securities.