---
title: "Not just the \"September curse\", the US stock market also has the \"old problem\" of October panic, why is this happening?"
type: "News"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/news/214098164.md"
description: "This old problem can be traced back to the 19th century, when the United States was in an agricultural financing cycle, the US dollar lacked elasticity, and late summer and early autumn became particularly unstable periods in the financial markets. Subsequently, the Federal Reserve was established, making the market more stable, but investors' habit of reducing risk in late summer and early autumn makes it more likely for US stocks to be weak in September and October"
datetime: "2024-09-11T20:38:57.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/214098164.md)
  - [en](https://longbridge.com/en/news/214098164.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/214098164.md)
---

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# Not just the "September curse", the US stock market also has the "old problem" of October panic, why is this happening?

This Wednesday, the U.S. stock market staged a V-shaped reversal, with major indices either turning higher or erasing most of their declines at noon: the slightly higher opening S&P 500 index quickly turned lower in the morning session, falling 1.6% at one point, and then reversing to rise in the afternoon session, the Nasdaq, which fell 1.4% in the morning, rose more than 1% in the afternoon, and the Dow, which fell more than 740 points in the morning, refreshed its daily high in the afternoon and only fell 33 points intraday. Although the S&P and Nasdaq have rebounded in the first two trading days of this week, looking at historical records, the recent trend of the U.S. stock market in the past two months may not be optimistic.

The sharp drop earlier this month made the impression of the "September curse" even deeper. Mark Higgins, Senior Vice President of Index Fund Advisors and author of "Investing in U.S. Financial History: Understanding the Past to Forecast the Future," pointed out that September and October have historically been poor-performing months for the U.S. stock market. The most severe stock market panics on Wall Street often occur in late summer and early autumn, a pattern that dates back to the 19th century. Some world-renowned examples include Black Friday in 1869, the panics of 1873 and 1907.

Why do U.S. stocks tend to perform poorly in September and October? Higgins explains that this is a byproduct of weaknesses in the past U.S. financial system. In simple terms, it is an old problem that existed before the birth of the Federal Reserve a century ago. At that time, the U.S. was in an agricultural financing cycle, with the dollar lacking elasticity, making late summer and early autumn particularly unstable periods in the financial markets.

Before the U.S. Congress passed the Federal Reserve Act in 1913 and introduced a central banking system, the U.S. had limited ability to adjust the money supply according to market conditions. In the 19th century, the U.S. economy still heavily relied on agricultural production. In the first eight months of each year, domestic farmers had limited demand for funds, so surplus funds held by state banks were transferred to New York banks or trust companies in search of higher returns. When the harvest season arrived in August, these state banks began to withdraw funds from New York as farmers withdrew funds from their personal accounts to support the transactions needed to transport crops to the market.

The agricultural financing cycle led to a long-term cash shortage in New York City in the fall. If this cash shortage coincided with a financial shock, the financial system had little flexibility to prevent panic in the stock market.

Higgins states that compared to the frequency, intensity, and pain of financial panics in the 19th century, the financial markets have become more stable since the establishment of the Federal Reserve. Overall, since the end of 1914 when the Federal Reserve began operations, the U.S. financial system has become more stable. However, during this period, the Federal Reserve has also made some mistakes, with the most embarrassing example being the failure to prevent the spread of bank failures in the 1930s.

Now that the U.S. is no longer an agrarian nation, why is the stock market still weak in September and October? Higgins believes that people tend to fear things that have happened before, even if they don't remember why they caused panic. The autumn panic may have occurred multiple times, to the point where it has become a self-fulfilling prophecy In other words, people expect it to happen, and because they expect it to happen, their behavior of reducing risk in late summer and early autumn makes it more likely to happen. Higgins said that he knows this may sound a bit exaggerated, but it may indeed be the case

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