September is historically the worst month of the year for stocks, but recent strength suggests the market could buck the trend

An trader works on the New York Stock Exchange's floor in New York City, New York. March 3, 2020. Andrew Kelly/Reuters
September has been historically the worst month for stock market returns.

The average stock return for September since 1928 has been -0.1%, with only 46% win ratio.

However, after such a strong start to 2018, September market returns could be more robust than consensus.

Subscribe to our daily newsletter 10 Things Before The Opening Bell.

September is historically the worst month for stocks that generate returns. However, recent strength in S&P 500 may change this.

Fundstrat data shows that September has had a stock market return of 0.1% since 1928. The win-ratio was only 46%.

According to LPL, September was an average down month for stocks in both the past 1o and 20 year and post-election years. LPL also reported that stocks experienced a 10% correction last year despite a rapid recovery from COVID-19.

Investors are likely to be cautious about the next four weeks due to September's tendency for stocks to fall. Fundstrat data indicates that September is a good month for equity returns, with markets seeing strong first half.

The stock market has delivered 1.4% median returns since 1928. In September, it had a win-ratio 67%. This was compared to the 13% gain in the first half. In the first six months 2021, the S&P 500 was up by more than 15%

Investors should not be surprised if stocks continue their upward trend in seasonality data. August was a positive month for stocks, despite historically low equity returns.

LPL stated that September could be a down month in the stock market. Investors should still take advantage of the dip to buy the stock, as "this bull market" is alive and well.