We’re about to enter the historically worst week of the year for US stocks
The September scaries — the tendency for US stocks to perform poorly in the ninth month of the year — have seemingly been vanquished this year. So far.
However, Brent Donnelly, president of Spectra Markets, was very early in highlighting a peculiar calendar quirk that implies some potential downside risk for next week.
Monday marks the start of the 39th trading week of the year. That’s historically been the worst week for the S&P 500, based on data going back to 1990, and the week that’s seen the highest incidence of 1% drops for the benchmark US stock index.
“Meanwhile, the week after next is the one where stocks are most likely to have a moment,” he wrote on September 11 (last Thursday). “There is something special about the week after September expiry and this has been true for basically ever. Could be a bit of the old fooled by randomness, but anyway.”
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Donnelly also separately flagged, though, that seasonality has not been that useful of a trading tool this year:
“2025 has not been good for the seasonality believers. My view is that seasonality functions mostly because of asymmetry of flows and human behavior around specific times of the year and political and macro shocks are bigger than those flows. So if you have a series of randomly-timed policy shocks month after month, that will blow the flows and the behavioral seasonality out of the water. That’s my explanation for why seasonality has not worked this year. But I could be wrong.”
