Market Recap - September 2023

Jeff McClenning |

Historically, August and September have provided disappointing returns for investors, according to monthly S&P 500 data from the St. Louis Federal Reserve.  Since 2010, the average monthly decline for the S&P 500 Index is -1.2%, the worst-performing month (excluding reinvested dividends).  It’s important to note that this isn’t a new trend.  Since 1970, the S&P 500 has averaged a 1.0% dip in September, which is also the worst-performing month during the period surveyed.

September has finished higher six times since 2010. But last month, September didn’t buck the averages. The S&P 500 Index finished lower for the fourth-straight year.

Key Index Returns




Dow Jones Industrial Average



Nasdaq Composite



S&P 500 Index



Russell 2000 Index



MSCI World ex-U.S.A*



MSCI Emerging Markets*



Bloomberg Barclays U.S. Aggregate Bond TR USD



Source: Wall Street Journal,, MarketWatch, Bloomberg
MTD returns: August 31, 2023–September 29, 2023 YTD returns: December 30, 2022–September 29, 2023

Last month’s market decline cannot be attributed to economic weakness. In fact, the economy has been surprisingly resilient. There hasn’t been a significant increase in the rate of inflation either. Although gasoline prices have recently risen, the price hikes for most goods and services have moderated.  Moreover, unexpected economic resilience may translate into stronger-than-expected corporate profits when Q3 reporting begins this month.

Instead, a jump in Treasury yields and a hawkish tilt by the Federal Reserve generated stiffer headwinds.  The Fed held its key rate, the fed funds rate, at 5.25%5.50% in September but kept the door open for another .25 percentage-point rate hike this year.  While prior projections have indicated the possibility of rate cuts next year, the Fed penciled in fewer reductions, according to its official projections.

It really boils down to economic performance and inflation. The rate of inflation has slowed, but inflation remains roughly double the Fed’s 2% annual target.  The Fed is walking a tightrope. It hasn’t let up on its tough anti-inflation rhetoric, and it hopes to lower the rate of inflation without tipping the economy into a recession.  Fed Chief Jerome Powell repeated the Fed’s 2% annual goal eight times in the opening remarks at the press conference that followed the Fed’s meeting.

In contrast, investors had been betting that the Federal Reserve was finished raising interest rates while anticipating a more accommodative stance next year.  Without diving into the minutia and academic theory behind interest rates and stock prices, let’s keep it simple. Higher interest rates create stiffer competition for an investor’s dollar.

Successful investors look past seasonal anomalies.  While exercises that pinpoint general seasonal patterns make for an interesting discussion and may help uncover some of September’s weakness, we know that market timing and implementing strategies based on timing aren’t a realistic approach.

So, focus on what you can control. You cannot control returns, but you can control your investment strategy and plan.  Successful long-term investors recognize that a disciplined approach is the shortest path to achieving financial objectives.

I trust you have found this review to be informative. If you have any inquiries or wish to discuss any concerns, please don’t hesitate to contact me or any member of my team.