Why Stock Market Always Dip In September? And… What’s Next for October?

(Feat. Israel Jewish New Year, Rosh Hashanah & S&P500, NASDAQ, Dow Jones)

Ever wonder why the stock market seems to stumble every September? Today is October 3rd, 2024, marking the celebration of Rosh Hashanah. Just like every year, the stock market took a dip in September, and this time was no different—it’s almost like clockwork. This year, the drop was especially sharp, with many pointing to a “Black Monday” on September 9, 2024.

So, why does this keep happening? Is it corporate tax deadlines? The Jewish New Year, Rosh Hashanah? Or maybe even some behind-the-scenes financial maneuvers that trigger these ‘black’ days? As we dig deeper into the forces at play, you’ll see that September’s market dip isn’t just a coincidence—it’s the result of a perfect storm of market-moving events.

1. The Jewish calendar doesn’t have 365 days like ours—it has 354 days.

2. It’s divided into 12 months: six months with 29 days and six months with 30 days, making up the 354 days.

3. Since a full year is closer to 365 days, they fix this difference by adding a 13th month every three years.

4. According to the Jewish calendar, 2024 is actually the year 5784, and the count starts with “Rosh Hashanah,” the day Adam was created.

5. Rosh Hashanah is essentially their version of New Year’s Day. (Hebrew: רֹאשׁ הַשָּׁנָה‎, Rōʾš hašŠānā, literally ‘head of the year’)

6. On this day, Jewish people celebrate by dipping apples and challah bread in honey and performing a ceremony called “Tashlich,” where they symbolically cast away their sins into a river.

7. But why bring up Rosh Hashanah when talking about the stock market? Because it plays a bigger role than you might think—not just because today is October 3rd, 2024, and it’s Rosh Hashanah.

8. Many Jewish-owned businesses close their annual books around Rosh Hashanah, which marks the end of their fiscal year.

9. In the U.S., most financial markets close their books in December.

10. As year-end approaches, investors often sell stocks to lock in profits and prepare for the new fiscal year.

11. Performance evaluations are based on year-end numbers, and many people take vacations during this time.

12. However, Jewish investors often close their books around Rosh Hashanah instead of waiting until December.

13. In 2024, Rosh Hashanah falls from the evening of October 2nd to October 4th, and today, October 3rd, is right in the middle of the celebration.

14. Starting in late August, many Jewish investors begin closing their books for the year 5784.

15. Jewish investors have significant influence in the stock market, and we often see a wave of stock selling around this time.

16. For top-performing stocks like Nvidia, investors may sell to boost year-end performance numbers, even if they plan to buy back later.

17. But September wasn’t just about Rosh Hashanah—there were plenty of other factors at play.

18. U.S. corporate tax payments are due in September, pulling liquidity out of the market.

19. The Federal Reserve’s FOMC meeting was held on September 18, followed by the Bank of Japan’s policy meeting on September 20, and Japan’s Liberal Democratic Party leadership election on September 29.

20. In July, I sold off some of my holdings in Japanese trading companies and bought gold, planning to revisit investment opportunities after mid-September.

21. September is notorious for its volatility, with price swings often larger than the actual risks.

22. My gold purchase seems to have been well-timed, and I may deploy cash from U.S. short-term bonds later this month.

23. With Japan’s election results in, I’m keeping an eye on Japanese domestic stocks that could benefit from a stronger yen.

Alphazen Comment

Many wonder why September is filled with so many ‘black’ days in the stock market. There are always plenty of reasons—just this year alone, we’ve seen jitters from the upcoming U.S. presidential election, tensions between Israel and Lebanon, Israel and Iran and the ongoing Middle East situation.

But while the headlines change, one thing remains constant: Rosh Hashanah, Jewish New Year. As today marks the middle of this important holiday, it’s a perfect reminder that some market shifts are as predictable as the changing seasons. Stay tuned for my next post, where I’ll dive into Japan’s election and what Shigeru Ishiba’s potential leadership could mean for the market.