U.S. stocks just had a good month, with the S&P 500 posting its best August performance since 2020

The bull market in U.S. stocks now heads into September - historically a weak month.

As the U.S. stock market heads into September, the S&P 500 stands a technical chance of dodging a big loss in what is historically a turbulent month.

"September's weakest returns have occurred when the S&P 500 begins the month below its 200-day average, which is not currently the case," according to a note from Oppenheimer & Co. over the weekend.

While the S&P 500 SPX fell 0.3% on Monday to 7,686.14, the index remained well above its 200-day moving average, which came in at 7,122.92, according to FactSet data.

That bodes well for the S&P 500, considering that since 1950 the index has averaged a 0.2% gain when starting above that "smoothed trend" level, Oppenheimer found. That beats the average loss of 3% seen for September when the S&P 500 begins the month below its 200-day moving average, as illustrated in the chart below.

OPPENHEIMER

The S&P 500's recent trend higher puts it in a relatively good position to weather potential turbulence in September, with no "major breakdown" appearing in the U.S. stock market, said Ari Wald, head of technical analysis at Oppenheimer, in a phone interview Monday. That might at least help the index avoid "a big negative scenario" in the coming month, he said.

September historically delivers the worst average return of any month for the S&P 500 since 1928, with a decline of 1.1%, according to Dow Jones Market Data. But looking a little further out, DataTrek Research co-founder Nicholas Colas sees reason to be optimistic about the U.S. large-cap stock index.

"The next 100 trading days take us through the end of January 2027, across both a notoriously volatile September" and seasonal fourth-quarter strength, Colas said in a note emailed Monday. That stage has been set up by the S&P 500's strong jump from its trough this year.

The S&P 500 has just come off a "statistically significant" rally of about 21% over the 100 days from its March 30 closing low through Aug. 21, according to Colas. While average forward 100-day returns after such an outsize rally of two standard deviations have "slipped in the current bull market," they remain positive, he said.

The U.S. stock market is broadly higher in 2026, with the S&P 500 rising 12.3% this year to put it on track for a fourth straight yearly gain.

The equities benchmark also gained 3% in August, which marks its best performance in the month since it climbed 7% in August 2020, and its biggest gain for any month since it ran up 10.4% in May.

With S&P 500 companies nearly finished reporting second-quarter earnings results, the market will be more influenced by macro trends in September, said Jack Janasiewicz, a multiasset portfolio manager at Natixis Investment Managers, in a phone interview Monday. Investors will be watching inflation closely, he said, as it's been running at elevated levels that keep a potential interest-rate hike on the table for the Federal Reserve.

Stocks fell on Monday, with the S&P 500, Dow Jones Industrial Average DJIA and Nasdaq Composite Index COMP all declining, as investors monitored heightened tensions in the Middle East and a rise in oil prices (CL00) (BRN00). The U.S. and Iran exchanged strikes over the weekend, marking the first significant military action in the conflict in more than a month.

The S&P 500, which has climbed 19% over the trailing 12 months, is just 1.4% below its Aug. 13 record closing high of 7,798.99.

"Bull markets don't die of old age, as they say," Oppenheimer's Wald told MarketWatch. From a technical perspective, "we do still see below-average market-top risk," he said. "We do think the setup is there for that fourth-quarter rally into 2027."

-Christine Idzelis