September Stock Market Trends Linked to Seasonal Affective Disorder

The Dow Jones Industrial Average historically records its lowest probability of gain during September, ending the month higher only 43% of the time compared to a 60% success rate in other months. While the index rose in the previous two Septembers, the average return for the month is minus 1.1%, contrasting with an average gain of 0.8% across the rest of the year.

Analysts have termed this trend the pumpkin-spice latte effect, linking the market dip to seasonal affective disorder (SAD). Research indicates a strong inverse correlation between stock market performance and SAD levels.

Raymond Lam, a professor and leadership chair in depression research at the University of British Columbia, identified the transition from August to September as the period with the greatest month-to-month change in SAD levels, suggesting a psychological driver for the seasonal financial decline.