The month of September began with mixed performance in the stock market, as major indexes experienced slight gains and losses. One contributing factor was the release of the August nonfarm payrolls report, which showed an unexpected increase in U.S. unemployment. While the U.S. economy created more jobs than forecasted, the unemployment rate also rose higher than expected.
In addition, the July Personal Consumption Expenditures (PCE) index figure revealed an increase in the Fed’s preferred inflation gauge, the year-over-year core PCE. Despite the Nasdaq and S&P 500 ending their winning streaks in August, the bullish tech theme has reappeared, with the Nasdaq showing consistent gains in the past five sessions.
September is historically known for weak seasonality, as shown by the average performance of the S&P 500 dating back to 1950. However, it’s important to consider the broader picture and the possibility of a new bull market in progress. While the market may face challenges during this weak seasonal period, it’s crucial to keep an open mind about potential outcomes.
September Performance and Buying Opportunity
Despite September being historically challenging, there have been instances when the market defied expectations. Looking back to 1950, when the S&P 500 experienced a negative August after a YTD gain of 10% or more, September proved to be higher in eight out of ten instances. This suggests that there could be a buying opportunity amidst the weak seasonal period.
Final Thoughts on September
While caution is warranted during this seasonal period, it’s essential to remember that the stock market often surprises investors. With many anticipating more downside in September, it’s worth considering the possibility of higher stock prices. In addition to leading growth stocks like NVDA and GOOGL, other areas of the market, such as homebuilders and manufacturing stocks, have shown strength. Staying informed and taking advantage of market opportunities is key as we enter September.
Note: The views and opinions expressed in this article are solely those of the author and do not reflect the official stance of Nasdaq, Inc.