A market strategist at Franklin Templeton Institute has warned that US equity markets could face a correction in September and October, urging investors to diversify their portfolios as widely as possible to cushion against a potential spike in volatility.
Łukasz Kałwak, a market strategist at the investment house, said the coming two months carry a heightened risk of turbulence on Wall Street, a period that has historically been unkind to equities. The warning is notable because it comes from a strategist at a major asset manager rather than from a short-seller or a perennial bear, and it points to a specific window rather than a general sense of caution.
Kałwak also identified a brighter stretch on the horizon. He expects the seasonally favourable period for stocks to arrive in mid-November, after the US midterm elections have passed. The implication is that investors may need to endure a bumpy autumn before the market backdrop improves.
The strategist's advice to pursue maximum diversification reflects the uncertainty of the outlook. Rather than recommending a wholesale retreat from equities, he suggests spreading exposure across assets so that a sharp move in any single market does not dominate returns. That approach is common among strategists who see a risk of near-term drawdowns but remain constructive on the longer-term trajectory of risk assets.
September and October are widely watched by market participants because of their historical record. Both months have hosted some of the most severe episodes of equity selling in modern financial history, and the autumn period has repeatedly coincided with shifts in monetary policy, earnings warnings and geopolitical shocks. The pattern has given rise to the informal label of a seasonal weak spot for stocks, though the reasons behind any given year's moves are rarely purely seasonal.
The US midterm elections add a further layer of uncertainty this year. Markets typically spend the weeks before the vote parsing the likely composition of Congress and the consequences for fiscal policy, regulation and the broader legislative agenda. Once the results are known, that uncertainty tends to clear, which is one reason some strategists expect a more supportive environment for equities in the weeks after the vote.
Kałwak's forecast places him among those who see the autumn as a period to manage risk rather than chase returns. For investors with diversified portfolios, the message is that the coming weeks may test discipline. For those considering new positions, the strategist's view suggests patience could be rewarded, with mid-November flagged as the point at which the seasonal tailwind is expected to return.
The warning is a reminder that even in a broadly positive market environment, the path can be uneven. Volatility clusters around specific dates and events, and the combination of seasonal weakness and a major political milestone makes this autumn a period that strategists at major institutions are watching closely.