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The summer stock market rally appears to have fizzled out after steep declines in August, and experts warn investors should expect more volatility in September, which is historically the market’s worst month—especially when stocks are already down for the year.


Stocks struggled to kick off September on a positive note Thursday, moving lower since last week as investors worry about tighter monetary policy, with the Federal Reserve expected to aggressively keep hiking interest rates well into next year.

After steep declines in August—with all three major indexes losing over 4%, experts are now warning of further losses ahead, given that September is historically a terrible month for markets.

“Although August is never a month to get excited about, as most investors know, September has historically been even worse,” with a median decline of 0.42% for the S&P 500 dating back to 1928, according to a note from Bespoke Investment Group.

This could be an especially “tough month” given the combination of “peak hawkishness from the Fed and the frustratingly slow pace at which inflation is cooling,” predicts Jeffrey Buchbinder, chief equity strategist for LPL Financial.

What’s more, the negative seasonal effects of September as the market’s worst month are “exacerbated” when the index is already down for the year, according to Bespoke.

On years that the market is down through the end of August, the S&P 500 has averaged a decline of 3.4% in September, but when the index was up for the year heading into September, it would end up flat for the month, according to the firm.