What September Slump? 5 ETFs to Play Now

September is historically the worst month of the year for U.S. stocks. The S&P 500 has retreated 56% of the time in September, by an average of 1.17%, per Bank of America’s Paul Ciana, who cited data dating back to 1927, as quoted on Bloomberg.

Note that terrifying financial events, such as the start of the Great Depression in 1929 or the fall of Lehman Brothers in 2008, all crept up in the month of September.

However, this September could be different due to the chances of a Fed rate cut in the United States. According to Chris Zaccarelli, chief investment officer at Northlight Asset Management, the market may remain strong even as it enters a seasonally weak period, as quoted on CNBC.

If there is any volatility, it could make a “great buying opportunity as we are setting up to rally into the year-end, especially if the Fed is cutting rates outside of a recession,” per Zaccarelli, as quoted on the above CNBC article.

Fed Rate Cut Probability

The Fed is likely to cut rates in September. There is currently an 86.9% probability of a 25-bp rate cut in September (at the time of writing), per the CME FedWatch Tool. If the Fed eases its policy, the greenback will likely lose strength and bond yields will fall, while stocks should soar.

As the Q2 earnings season concludes, the overall earnings picture remains stable. As we have consistently highlighted in recent weeks, the overall earnings revisions trend remains favorable. We see this in the estimates for the current period (Q3 2025) as well as for the last quarter of the year.

Although there are talks of a bubble forming in the artificial intelligence (AI) space, the boom is still very much in place. This is the backdrop against which investors have entered September.

All these make it more important to pinpoint exchange-traded funds (ETFs) that have the power to move ahead this September.

ETFs in Focus for September

Financial Select Sector SPDR ETF XLF – Zacks Rank #1 (Strong Buy)

Since the start of Q3 this month, estimates have increased modestly for five of the 16 Zacks sectors, including Finance, Tech, Energy, Retail and others.

The largest banks of the United States posted strong earnings results in the latest earnings season.  Despite the ongoing tariff threats and policy uncertainty, banks reported that corporate clients remain strong, as indicated on a Yahoo Finance article. IPO and M&A activities remained decent.

ALPS OShares U.S. Quality Dividend ETF OUSA – Zacks Rank #2 (Buy)

The underlying OShares U.S. Quality Dividend Index measures the performance of publicly listed large-capitalization and mid-capitalization dividend-paying issuers in the United States. The fund charges 48 bps in fees and currently has a Zacks ETF Rank #2. Dividend investing offers great safety in any kind of economic doldrums.

VanEck Retail ETF RTH – Zacks Rank #3 (Hold)

A few factors are favoring this sector. A decent inflation level, a moderate labor market and last-minute back-to-school/college shopping should give the space a boost. Plus, the sector should perform in a low interest-rate environment. The retail sales momentum, too, has been decent.

VanEck Gold Miners ETF GDX

Gold prices have gained over 4% over the past month (as of Sept. 2, 2025), due to the Fed’s rate cut hopes, surging central bank demand, especially from emerging economies, and the yellow metal’s safe-haven own appeal. As mining stocks often act as leveraged plays of the underlying metal, gold mining ETFs have the chance to move higher in the near future.

First Trust NASDAQ Cybersecurity ETF CIBR

The shift toward cloud computing has led to high demand for advanced cybersecurity. Heightened geopolitical tensions also led organizations to adopt more cybersecurity solutions.

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This article originally published on Zacks Investment Research (zacks.com).

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