Stocks have brushed aside September’s dark reputation this year. Since late August, the S&P 500 has gained more than 3%, the Nasdaq over 5%, and the Dow and Russell 2000 have also pushed higher, defying the calendar’s most notorious slump .

Meanwhile, gold has surged 11% , and the VIX — a measure of market volatility — has crept up instead of collapsing . At the same time, the dollar has barely budged. It's an unusual mix of signals. The overall picture is of a market that's stayed high despite seasonal headwinds, with the tech-heavy Nasdaq leading the charge and small caps perking along, too.

The natural next question is: Why is the market bucking historical patterns, and what are the forces behind this unusual streak?

Federal Reserve Chair Jerome Powell essentially promised a rate cut in a speech at Jackson Hole in late August, and the Fed delivered with a cut on September 17 — the first this year.

Lower borrowing costs are oxygen for stocks , especially growth and tech, and help explain the strength in major indexes. Aside from the more obviously weighted Nasdaq, the S&P is tilted toward tech, too, with the sector representing around 30-40% of the index, depending on how you define “tech.”

The supporting cast tells its own story. Gold’s continuing rally — it’s up nearly 50% so far in 2025 — points to lingering caution around the USD, which has been buffeted by shifting federal policy. The VIX’s rise likewise hints at persistent unease. It’s a market rallying on rate cuts, but in a way that’s complicated and all the more striking for arriving in September, the month investors have long been conditioned to dread .

The “September slump” is one of Wall Street’s oldest pieces of market lore, grounded in data going back a hundred years, with the S&P 500 averaging a decline of around 1% in September — the only month with consistently negative average returns .

The pattern was particularly notable in certain decades. From 1960 through 1989, for example, September was the weakest month in more than half of those years. The seasonal effect is observable in foreign markets, too — more of a global phenomenon than one might think, thought it's also true that correlation across markets has increased across the world in recent decades.

The term “ September Effect ” began to show up in financial media in the 1980s and 1990s as analysts noted the pattern. It was sometimes discussed alongside other calendar anomalies like the “ January effect ,” but it drew more attention because the underperformance was so stubborn (and easy to chart). Explanations have run the gamut: mutual fund managers rebalancing ahead of the year-end, tax-loss harvesting before Q4, or even a self-fulfilling prophecy as traders sell because they expect others to do so.

Whatever the mechanism, the phrase “September slump” has, over the last few decades, become shorthand for a sharp seasonal drag on returns.

Another force helping markets shake off the September curse is the near-unstoppable trend of AI and its spread. Wall Street remains convinced AI is not just a hype cycle but a new industrial revolution , one that justifies elevated valuations for tech giants and their many suppliers. The sense that we’re in the early innings of a multi-trillion-dollar infrastructure upgrade helps explain why tech stocks stay frothy.

At the same time, Wall Street appears to be embracing the unpalatable logic of a “ jobless recovery .” Weaker employment data is increasingly seen as good for corporate margins . Slower wage growth and softer labor demand mean costs remain contained even as revenues grow.

Powell has acknowledged this “curious” moment of simultaneous weakness in both labor supply and demand, with younger workers and minorities hit hardest. But for companies, it can be good news, contributing to heftier margins and rising profits. Combined with falling borrowing costs, we’re seeing a double boost for stocks — cheaper capital, higher margins — which goes a long way toward explaining why indexes are climbing even in the calendar’s toughest month.