Get Ready for a Tough September in markets.

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The stock market’s worst month—September—is approaching. This one could be particularly bad.

The S&P 500 has averaged a 1% loss in September—dating back to 1928. according to Dow Jones market data. The same is true for the Dow Jones Industrial Average, dating back to 1896. Those are the worst monthly performances for both indexes in the calendar year. 

That phenomena is well known, but this year brings about heightened risks that are coalescing right now. First off, the stock market has already ripped higher recently, with both indexes up double digits in percentage terms since their lowest levels of the year in mid June. That is because markets have watched the inflation rate decline a bit, and the Federal Reserve respond by noting that it will likely slow down the pace of interest-rate hikes. 

But now, those bets are partially unwinding.

The probability of a three-quarter-point interest rate hike in September has risen in the past week, with a half-point raise now seen as less likely. That is bringing borrowing costs higher, with rates on investment-grade and high-yield bonds moving up in the past several weeks. That threatens to slow down consumer and business spending.

Lower spending would drag down corporate earnings. Stocks trade on a multiple of earnings, and if corporate profits take a hit, stocks will take a hit.

Then, there are oil prices. They have sagged in recent weeks, putting extra money in the pockets of consumers ever time they fill up the tank. The price of WTI Crude Oil has remained in the high 80s in dollars per barrel—a key support level. Its multiyear high. hit earlier this year above $100, is more than 10% above its current level.

Oil prices have been hurt by the slowing of the Chinese economy. China just cut a key rate to reignite its economy, and it that works, oil prices could rise again. Likewise, a never-ending war in Ukraine could push up energy prices again as it did earlier this year.

If oil prices climb back into the stratosphere, that would be yet another force tugging down markets.

Julian Emanuel, equity strategist at Evercore, wrote that the market’s recent ability to rise despite rising rates will fade. On top of that, September is historically a weak month, he added.

There is one piece of good news, though: Some of that selling may have already begun. The Dow and S&P 500 are down in consecutive days from Friday, with the latter down about 3% in that stretch. Maybe September has come early this year.

But for the moment, “the “Don’t Fight the Fed” theme is back on the front burner,” wrote Louis Navellier, founder of Navellier & Associates.

So there could be more selling in the coming month. 

Write to Jacob Sonenshine at [email protected]