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September and October have historically been weaker months for Stocks, dating back to the 1800s. The late summer and early autumn months have seen intense panics on Wall Street, such as Black Friday of 1869, the Panic of 1873, and the Panic of 1907.
This trend can be attributed to weaknesses in the U.S. financial system prior to the establishment of the Federal Reserve Act in 1913. The inelasticity of the U.S. currency, coupled with the agricultural financing cycle, led to chronic cash shortages in New York City during the autumn months, making it a precarious time for the market.
The limited government response to these panics eventually led to the passage of the Federal Reserve Act, granting the Fed the power to serve as a lender of last resort during financial crises. Since its establishment, the Federal Reserve has provided more stability to the financial markets, despite a few mistakes along the way.
While the U.S. economy is no longer primarily agricultural, the fear and expectation of fall panics have become a self-fulfilling prophecy. People tend to behave in ways that make these panics more likely, even if they don’t remember the origin of the fear.
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Emily Jensen, graduated from the London School of Economics and Political Science (LSE) in the UK in 2015 with a degree in Economics. She specializes in financial markets and international trade. After graduating, she worked as an analyst at an investment bank in London, where she developed expertise in global economic trends. She later transitioned into consulting, focusing on fintech ventures and providing insights into global economic developments. Emily is passionate about the intersection of finance and technology and aims to drive innovation in the financial sector.
