Watch out: September's poor market track record is getting worse — especially for certain stocks

Published Thu, Aug 10 202311:47 AM EDTUpdated Thu, Aug 10 20232:04 PM EDT

Wall Street is barreling toward what's historically been the worst month for stocks, according to CNBC Pro data. The major averages have shown some weakness since the start of August as traders digested lackluster macroeconomic data that spurred some fears of a pullback. As of Thursday morning, the tech-heavy Nasdaq Composite has performed the worst of the three major averages this month. It's down more than 2% in August, though it remains 33% higher for the year. CNBC Pro analysis of seasonal data showed there could be more trouble ahead as September is typically the weakest month for the S & P 500 — a historical pattern that's grown more pronounced in recent years. Over the past 10 years, the S & P 500 dropped 1.53% on average in September. That's greater than the average 20-year decline of 0.52%. In both instances, that marked next month as the worst one out of 12 for the benchmark. "September sits at a pretty serious inflection point in the calendar and in the market," said Jeff Hirsch, editor in chief of the Stock Trader's Almanac. Next month is typically when traders return to their desks after a long summer and start to do some house cleaning on their portfolios. They're seeking both to nail down gains for the quarter and also prepare for tax losses. Historically, that's meant an especially bad month for technology stocks. Over the past 10 years, the sector fell 2.14% on average, making it the worst performer in the S & P 500. September is the weakest month for Apple, which dropped 2.82% on average, and Google parent Alphabet, which fell an average 2.2%. For Amazon, September is the 11th weakest month, dropping 2.59%. For Meta, it's the 10th worst month, as shares fall 1.96% on average. Meanwhile, September is historically the ninth worst month for this year's biggest artificial intelligence beneficiary Nvidia, which is higher this year by nearly 200%. Over the past 10 years, it has dropped 0.54% on average, though outpacing the broader index. Still, the Stock Trader Almanac's Hirsch does not expect any decline in the large tech names to last for very long. He cited the tech companies' ability to continue to churn out solid quarterly results. "After being up so much, and all of the hype from AI and all the tech advances, it's just a bit of a pause," Hirsch added. "I don't expect any September sell-off to — or any August-September sell-off that we're starting to experience — to be sustained for technology." In September, the best performers in the broader index included industrial and health-care stocks, which outperformed the broader index after falling 0.98% and 1.28%, respectively. For traders, a dip over the next two months could spell a buying opportunity. However, Hirsch urged investors also to prepare for any possible pullback ahead of time. "September and October are a buying opportunity every year," Hirsch added. "Yes, use those dips to position yourself but it's when people stop saying, 'oh, buy the dip,' is when the dip is actually attractive to buy." "Don't just buy the dip. Be prepared for it," Hirsch added. — CNBC's Chris Hayes contributed reporting.