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September has a reputation for being the worst month of the year for stocks. But the historical pattern is more interesting than that.
September is almost two different months.
The first half of September has typically been relatively benign for the S&P 500. Stocks tend to move sideways or edge higher before reaching a seasonal high around the middle of the month.
Then the pattern suddenly changes.
Since 1950 the S&P 500 has fallen an average of 0.6% in the month and has finished higher in only 45% of years, according to Adam Turnquist, chief technical strategist at LPL Financial.
Turnquist said the average is not the whole picture.
Stocks have historically held up through the first half of September before weakening into the second half.
LPL's analysis shows the index's average intramonth performance reaching its high-water mark around the 11th trading day.
That is what makes this year's Fed meeting so interesting. The Sept. 15–16 meeting does not merely fall somewhere inside September.
It falls almost exactly where the historical market pattern tends to turn.
"That timing is notable because it has historically coincided with the high-water mark for the S&P 500's intramonth performance," Turnquist said.
The important word is coincidence.
Seasonality does not tell investors that stocks must fall after the Fed meeting. It tells them that the market has historically behaved differently before and after this point in the month.
And this year, there is a powerful macro event sitting directly on that historical dividing line.
The Federal Open Market Committee has eight scheduled meetings each year.
Only four, however, come with a fresh Summary of Economic Projections, or SEP.
The September meeting is one of them.
That makes it different from a routine rate decision because investors get a new set of projections for economic growth, unemployment, inflation and the federal funds rate.
But September has another feature that makes this year's projections particularly important.
The Fed extends its projection horizon by one year.
The June 2026 SEP covered 2026, 2027 and 2028. The September SEP should therefore introduce 2029 projections for the first time.
That gives markets a new question to answer.
Not simply: Will the Fed hike or cut rates in September? But where does the Fed think interest rates are heading over the next three years?
That distinction could matter enormously for asset prices.
The timing becomes even more important because expectations for September have shifted sharply.
Fed futures now put the probability of a quarter-point rate hike at 66.1%, up from 41.4% a week earlier.
That repricing followed Fed Chair Kevin Warsh's Jackson Hole speech.
Warsh reiterated the Fed's commitment to its 2% inflation target and said financial conditions were not restrictive.
That matters because markets are now entering September with a very different policy expectation than they had only days earlier.
"September remains a live meeting," Turnquist said.
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