After the "terrifying Monday" in early August, the US stock market gradually stabilized, with the Dow hitting a new historical high, and the Nasdaq and S&P 500 also rebounding to historical highs. The current market seems to be developing in an optimistic direction, but as September arrives, the century-old "September Curse" looms like a dark cloud over Wall Street.

Since 1990, S&P 500 Index (.SPX.US) September has averaged a 1.04% decline, with only a 47% probability of closing positive, faring much worse than other months. This seasonal effect has been particularly evident in recent years, with the S&P 500 index falling by 3.9%, 4.8%, 9.3%, and 4.9% in the last four Septembers (2020-2023).

The Causes of the 'September Curse' in the US Stock Market

There are various opinions on the causes of the 'September Curse' in the US stock market, but in summary, they are nothing but the following possibilities:

1. Traders returning to the market after holidays leading to increased volatility

American traders tend to take summer vacations, resulting in reduced trading activity and lower market trading volume. When they return to the market in September and rebalance their portfolios, trading activity increases significantly, leading to increased volatility. According to Citigroup's analysis of data since 1928, the average actual volatility of the S&P 500 index in September is 1.5 percentage points higher than in August.

2. Increased selling pressure from institutional investors

End-of-quarter reports and tax implications are important factors explaining this seasonal artificial selling. As the third quarter trading season comes to an end, mutual funds may sell losing stocks at the end of September to avoid them appearing in quarterly reports, or sell profitable stocks to lock in profits. In addition, mutual funds must have year-end tax loss clearing by October 31, which gives them more incentive to sell losing positions in September to reduce the scale of capital gains distribution.

3. Families sell stocks to pay for education expenses

Some studies have shown that many individual investors tend to sell some stocks after the end of summer in September to realize profits and use the proceeds to pay for tuition, purchase back-to-school supplies, or pay off credit card bills from vacations.

4. Market expectations are pessimistic

Historically, some notable unexpected events have occurred in September. These include the 'Black Friday' of 1869, the American Dust Bowl and Great Depression of 1931, the '9/11' terrorist attacks in 2001, and the intensification of the subprime mortgage crisis in 2008. These historical events have led to heightened risk-aversion sentiment among some investors during this time, and seasonal affective disorder has exacerbated volatility in September US stocks.

Interest rate cuts and elections become the focus of the market

Due to this year being an election year and the expected first interest rate cut in September, the situation in September seems different from the norm.

1. Interest rate cut in September Fed Chairman Powell signaled a strong interest rate cut at the Jackson Hole Global Central Bank Symposium last month, explicitly stating that the time for policy adjustment has come. It is widely expected that the Fed's interest rate decision on September 19th at 2 a.m. will mark the first interest rate cut of the year, which is usually seen as a signal to boost stock market growth.

The latest data from the CME Group's FedWatch Tool shows that traders currently believe there is a 100% probability of an interest rate cut in September, with a 69% probability of a 25 basis point cut. If this Friday's non-farm payrolls data shows weakness again, the expectation of a 50 basis point cut may increase.

2. Election year Historically, September in election years has had a relatively minor negative impact on the stock market. Among all election years after World War II, September has averaged a 0.58% decline, much lower than the average decline of 1.37% in non-election years. Young Thomas of SoFi explains that in election years, volatility typically peaks in mid-October, not at the end of September. The market is closely watching the first face-to-face debate between Harris and Trump next week, as both have agreed to participate in the presidential debate hosted by ABC on September 10th.

2. Election year Historically, September in election years has had a relatively minor negative impact on the stock market. Among all election years after World War II, September has averaged a 0.58% decline, much lower than the average decline of 1.37% in non-election years. Young Thomas of SoFi explains that in election years, volatility typically peaks in mid-October, not at the end of September. The market is closely watching the first face-to-face debate between Harris and Trump next week, as both have agreed to participate in the presidential debate hosted by ABC on September 10th.

2. Election year Historically, September in election years has had a relatively minor negative impact on the stock market. Among all election years after World War II, September has averaged a 0.58% decline, much lower than the average decline of 1.37% in non-election years. Young Thomas of SoFi explains that in election years, volatility typically peaks in mid-October, not at the end of September. The market is closely watching the first face-to-face debate between Harris and Trump next week, as both have agreed to participate in the presidential debate hosted by ABC on September 10th.the Dow Jones Industrial Average (.DJI.US) 2. Election year Historically, September in election years has had a relatively minor negative impact on the stock market. Among all election years after World War II, September has averaged a 0.58% decline, much lower than the average decline of 1.37% in non-election years. Young Thomas of SoFi explains that in election years, volatility typically peaks in mid-October, not at the end of September. The market is closely watching the first face-to-face debate between Harris and Trump next week, as both have agreed to participate in the presidential debate hosted by ABC on September 10th.

How should investors allocate their portfolios?

Regardless of whether this year's interest rate cuts and elections will help the U.S. stock market get rid of the "September curse," it won't hurt for cautious investors to remain vigilant. The following trading strategies can help investors effectively avoid seasonal fluctuations:

During a period of declining interest rates, the investment value of high-dividend sectors such as utilities, consumer staples, and healthcare becomes more prominent. Faced with potential market volatility, stocks in these sectors with stable dividend growth and high free cash flow yield also have stronger defensive attributes. Sandy Villere, portfolio manager at Villere & Co, said, "If you expect greater volatility in September than usual, it's time to sell offensive stocks and buy defensive stocks."

1. Utilities sector:

In the utilities sector, the American electric power giant $Vistra Energy$ and the largest carbon-free nuclear power giant in the United States $Constellation Energy$ And American energy giants. $NRG Energy(NRG.US)$ It's the best performing three stocks in the industry this year.

In addition to utility stocks, the US stock market also has many ETFs related to utilities worth investor attention, among them,$SPDR Utilities Select Sector Index ETF(XLU.US)$Please use your Futubull account to access the feature.$Global X US Infrastructure DevelopmentETF(PAVE.US)$Please use your Futubull account to access the feature.$Utility Select Sector SPDR Fund (VPU.US)$Please use your Futubull account to access the feature.$iShares S&P Global Infrastructure Index ETF (IGF.US)$Please use your Futubull account to access the feature.$iShares U.S. Infrastructure ETF (IFRA.US)$ These ETFs are among the top 5 largest utilities ETFs in the US market. They have performed well this year, with cumulative gains ranging from 12% to 22%.

$菲利普莫里斯(PM.US)$

, the UK consumer daily goods giant $Walmart (WMT.US)$N/A.$Costco (COST.US)$ , the beverage giant Altria Group (MO.US) Please use your Futubull account to access the feature.Philip Morris International (PM.US) Global FMCG (fast-moving consumer goods) giant $Unilever (United Kingdom) (UL.US)$ has also reached a historical high, with a year-to-date increase ranging from 17% to 46%. As the world's second largest tobacco manufacturer American Airlines 尽管还未触及历史新高，但年内涨幅也高达35%。coca-cola (KO.US) $日常消费品精选行业指数ETF-SPDR(XLP.US)$The stock price of Kimberly-Clark fell 5.7% on the day its financial report was released.$非周期性消费品ETF-Vanguard(VDC.US)$Procter & Gamble$欧洲ETF-iShares(IEV.US)$$British American Tobacco (BTI.US)$ Although it has not yet reached a historical high, the year-to-date increase is as high as 35%.

、 $SPDR Consumer Staples Select Sector Index ETF (XLP.US)$Please use your Futubull account to access the feature.$Vanguard Consumer Staples ETF (VDC.US)$Please use your Futubull account to access the feature.Europe ETF-iShares (IEV.US)Please use your Futubull account to access the feature.iShares U.S. Consumer Goods ETF (IYK.US)Please use your Futubull account to access the feature.Fidelity MSCI Consumer Staples Index ETF (FSTA.US) , with a year-to-date increase of about 11%-16%.

$HCA医疗(HCA.US)$

Boston Scientific, the giant of global cardiovascular $Eli Lilly and Co(LLY.US)$ rose 1.52%, with a turnover of 2.1 billion US dollars. The US Food and Drug Administration (FDA) analyzed the trial data of Eli Lilly's experimental Alzheimer's drug donanemab and found that it did not show significant safety signals, but also raised concerns about the safety of the drug in early patient treatment.Please use your Futubull account to access the feature.Among various sectors, banks rose by more than 1.4%, medical sector rose by nearly 1.4%, benefiting from the highest market value European pharmaceutical company, Novo Nordisk A/S (NVO.US), which is listed in Denmark and rose nearly 4%, setting a new high in its stock price, and thus sent Denmark's stock index to a new high. The technology sector rose by more than 1.2%. Among the constituent stocks, after the CEO provided positive guidance for 2026 and 2027, the German enterprise software giant SAP rose 3.6%. ASML, the Dutch-listed highest market value technology stock, which rose more than 1.5% after setting new record highs for two consecutive days and driving the AEX index to reach new highs for two consecutive days. The pharmaceutical giant Other 、 $HCA Healthcare(HCA.US)$ 、 Boston Scientific (BSX.US) Orthopedic giants around the world, Regeneron Pharmaceuticals (REGN.US) and others have reached new historical highs during the year, with gains ranging from 18% to 64%, and the highest increase even surpassing other technology giants except for Nvidia.AstraZeneca (AZN.US)Please use your Futubull account to access the feature.AbbVie Inc.Please use your Futubull account to access the feature.Recently, Goldman Sachs and JPMorgan have been singing a bearish tune about the US stock market. They believe that the ever-increasing fiscal deficit and the high concentration of gains are accumulating risks. $ARK生物基因科技革新主动型ETF(ARKG.US)$Stryker Corp., with comparable revenue to Synthes at that time, ultimately broke the industry's internal rectification and reshaped the competition pattern of the entire orthopedic track with a bold purchase.$第一信托纽约证交所Arca生物科技(FBT.US)$

、 $SPDR S&P Biotech ETF (XBI.US)$ is a leading ETF that tracks the S&P Biotech Select Sector Index with an asset management size of approximately 7 billion US dollars. This ETF prefers small-cap growth stocks and has a management fee of 0.35%.Please use your Futubull account to access the feature.$Biotechnology Index ETF-iShares(IBB.US)$Please use your Futubull account to access the feature.$ARK Genomic Revolution ETF (ARKG.US)$Please use your Futubull account to access the feature.$First Trust NYSE Arca Biotechnology (FBT.US)$Please use your Futubull account to access the feature.$3x Long Biotech ETF-Direxion(LABU.US)$Will the curse of the US stock market reappear? Welcome to discuss~

Editor/Lambor