The S&P 500 Fell in Both September and October for Only the 17th Time Since 1950. Here’s What Usually Followed.
The S&P 500 (SNPINDEX:^GSPC) closed September at 7,651.54 and October at 7,580.07. That’s two monthly losses in a row, of around 0.5% and 0.9%, and the first time since 2023 that the index has dipped in both months.
October’s loss came late. Heading into its last session, the index was up around 0.9% for the month, and a fall of about 1.8% on Oct. 30 sent it under September’s close. Yet the S&P 500 has risen around 11% this year and finished October within about 3% of the record it set on Oct. 6.
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I wanted to see what has usually come next. With month-end closes (price only, no dividends), I found 16 past years since 1950 when the index dropped in both months. That comes to around one year in five.
Image source: Getty Images.
The 16 cases
Most of these years finished well. The index rose over November and December in 12 of the 16, and the median two-month gain was around 3.7%. The four that didn’t were 1957, 1987, 2000, and 2008.
The next 12 months looked even better. A year after the end of October, the S&P 500 was higher in 14 of the 16, and the typical gain was around 13%. Of course, two of these gains hardly counted, at about 0.1% after 1952 and 0.9% after 1977.
The two losses were in 1989 and 2000.
In 1989, the index had already climbed around 23% for the year through October. The next 12 months ran into a recession that started in August 1990, according to the National Bureau of Economic Research, and the S&P 500 finished that stretch down about 11%. In 2000, the index had peaked back in March, early in the dot-com bust, and it dropped around 26% over the next year.
Two down months didn’t shift the odds much
This record looks a lot like a normal year’s.
From 1950 through 2025, the index gained over November and December in 59 of 76 years, or around 78% of the time, and the typical rise was about 3.6%. After a down September and October, the rate was 75%, with a typical rise of around 3.7%. So two losing months haven’t said much about how the year finishes.
The 12-month results look a bit more favorable — 14 of 16, versus 60 of the 75 years from 1950 through 2024. But with just 16 cases, a gap that small could easily come down to luck.
And the starting year matters. Yahoo Finance’s data for the index goes back to the end of 1927, and the years before 1950 have eight more September-October drops, mostly in the Great Depression.
Those did worse. The index gained over November and December in only three of the eight, and it was higher a year later in just four. I left them out because a market recovering from the 1929 crash arguably has little in common with today’s.
Which years look most like 2026?
By size, this year’s dip was one of the smallest. Combined, September and October knocked around 1.4% off the index, the second-smallest two-month loss of the 17 cases, behind 1984’s 0.4%.
The other years with two-month losses of around 3% or less didn’t agree on much. The index climbed about 7% over the year after October 1951, 14% after 1984, and 21% after 2016. But it was flat after 1952 and lost about 11% after 1989.
Most of the big rebounds followed deeper fall declines. In 1990, 2020, and 2023, the index lost about 6% to 7% over September and October, then rose 29% to 41% over the next 12 months.
Just two of the 16 earlier years had a record close during September or October, like 2026 did: 1989 (on Oct. 9) and 2020 (on Sept. 2). The year after October 2020 saw the group’s largest gain, but 1989 led to one of its two losses.
The index’s valuation is another matter. Its cyclically adjusted price-to-earnings ratio, a measure that sets the price against a decade of inflation-adjusted profits, began October at around 41. Of the 16 earlier years, just 2000 got close, at about 39. In 1984 and 2016, it was around 10 and 27.
Overall, what usually followed was a gain, at about the same rate as in any other year. I think the two-month dip says little by itself, in either direction.
For buy-and-hold investors adding to an index fund like the Vanguard S&P 500 ETF on a regular schedule, I don’t see a reason in this history to stop or speed up. I’d just keep my expectations modest, given where the valuation stands.
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