Back To Work And Back In The Red

The S&P 500 is off to another weak start after Labor Day, down about 0.4% as we write this. If the decline holds through the close, it would mark the tenth straight year that the index has fallen on the day after the holiday. The last gain was in 2016, when the S&P 500 rose 0.30%.

Since 1945, the day after Labor Day has averaged a decline of 0.14%, with gains 49% of the time. Over the last ten years, though, the average decline has been a much larger 0.81%. That recent weakness has often extended beyond the first day back. The S&P 500 has declined in seven of the last ten Labor Day weeks, averaging a drop of 0.80%. Performance over the rest of September, historically the weakest month of the year, has been evenly split between gains and losses, but the average return has been negative at -1.17%, although the median decline is a much more modest 0.05%. September declines of more than 5% in 2021, 2022, and 2023 weighed on that average.

Through year-end, the picture has been more positive. The S&P 500 has rallied over the post-Labor Day period in eight of the last ten years, averaging a gain of 3.57% and a median gain of 5.36%. The only declines came in 2018 and 2022, with 2018’s 13.60% drop standing out as the weakest by far. Those results are broadly consistent with the longer-term record. Since 1945, the index has averaged a 3.23% gain over the rest of the year, with positive returns 73% of the time.