Wall Street braces for September volatility after August gains

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Wall Street September volatility

Highlights

Historical data from the 2026 Stock Trader’s Almanac shows the S&P 500 falls 0.7% on average in September since 1950, contrasting August's 2% gain.
Pre-tax corporate profits reach $4.8 trillion—18% of national income—in Q2, the highest share since 1950, fueling recent market gains.
Risks for September include persistent 3.7% PCE inflation in July, renewed U.S.-Iran hostilities, and West Texas Intermediate crude rising to $86.79 a barrel.

Seasonal signals point to weaker month

As reported by CNBC, September ranks as the weakest month for major U.S. stock indexes over decades, according to the 2026 Stock Trader’s Almanac compiled by Jeffrey Hirsch and Christopher Mistal. The almanac shows the Dow Jones Industrial Average falls an average of 0.8% in September since 1950, while the S&P 500 declines 0.7% over the same period.

The Nasdaq Composite drops an average of 0.9% in the month since 1971, and the Russell 2000 loses 0.8% since 1979. Hirsch and Mistal say portfolio managers returning after Labor Day often reposition holdings in September, with end-of-quarter mutual fund restructuring contributing to weaker closes even when the S&P 500 starts the month strongly.

That pattern contrasts with August, when the S&P 500 rises more than 2% and the Dow gains more than 1%. JC O’Hara, chief technical strategist at Roth, says U.S. midterm election years have historically brought added volatility in September and October, while current sector rotation suggests a more defensive stance heading into the fall.

Profits, inflation and geopolitics shape outlook

The recent market strength is supported by surging corporate profits. Pre-tax corporate profits jump to $4.8 trillion in the second quarter, equal to 18% of national income, the highest share since at least 1950.

August also brings a closely watched second-quarter earnings report from Nvidia, a central company in the continuing investment push across the computing sector. The company raises revenue guidance by more than Wall Street expects, but also reports a sharp increase in accounts receivable and a related decline in free cash flow.

Investors now also face renewed external risks in September. Financial markets are processing continued hostilities between the U.S. and Iran after both sides exchange strikes, while inflation remains elevated, with the personal consumption expenditures price index rising 3.7% in July, above the Federal Reserve’s 2% target; West Texas Intermediate crude reaches $86.79 a barrel on Monday, near its recent August high.

In our earlier article on market conditions heading into September, we noted that stocks were holding near record highs after a quiet August even as key indicators sat near levels that could quickly shift sentiment. We highlighted low volatility alongside rising Treasury yields and a near-even market view on a September Fed hike, while also pointing to heavy earnings concentration in a handful of mega-cap chip names as a potential vulnerability.

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