Did U.S. Stocks Dodge the “September Curse”? Goldman Sachs Warns: October Storm Is Coming

This September, the dreaded “September Curse” that spooks U.S. stock investors didn’t hit. Instead, the market’s on track for its best September in 15 years, with the major indices hitting new highs left and right.

 

 

As September winds down, Bank of America analysts are eyeing more gains in October, noting that the fourth quarter is historically the strongest for stocks.

 

But Goldman Sachs is waving a red flag, warning that after September’s surprise rally, October could bring a rough reality check.

Did Stocks Break the Seasonal Pattern?

The “September Curse” is real—over the past couple of decades, September has often been a weak month for U.S. stocks, with a rebound typically coming in Q4.

 

This year, though? It’s a different story. The S&P 500 is up 2.75% so far, potentially its best September since 2010.

 

Tech stocks are stealing the show. The Nasdaq 100 has climbed 4.86% this month, and the Technology Select Sector SPDR Fund is up 7.5%, marking its second-best September since its 1999 launch. That’s a far cry from the Nasdaq’s average 2.2% September drop over the past 25 years.

 

Fueled by AI demand and Fed rate-cut expectations, companies like Oracle, Tesla, Micron Technology, and Apple have powered this rally. September’s been a wild, almost euphoric ride, feeling more like a typical July or December surge.

 

But Goldman Sachs says hold off on the champagne—October could bring trouble.

October Volatility on the Horizon

In a Tuesday report, Goldman Sachs equity analyst John Marshall warned that the good times might not last. “Looking at history, we expect global stock market volatility to spike in October.”

 

The data backs this up. Over decades, October’s realized volatility has been 25% higher than other months. Goldman points out a pattern: October often sees a surge in trading activity due to earnings pressure, year-end performance reviews, and big macro events.

 

“Earnings season in October is typically the most volatile time of the year, and event-driven swings could amplify that,” Goldman noted. Fed officials’ comments and the latest CPI report will also be in the spotlight.

 

Goldman also highlighted that single-stock trading volume—stocks and options—tends to peak in October. From 1996 to 2024, the average daily notional trading volume for individual stocks and options hit its high in October, showing investors often feel the heat and act. “This supports our view that performance pressure drives more trading,” Goldman said.

 

While volatility is expected to be widespread, Goldman sees opportunities in single-stock options to capitalize on earnings-driven moves.