September is historically considered the worst month of the year for stocks, known as the “September Effect”.
But this year, market experts seem divided on whether US stocks will repeat or defy the pattern.
Here’s where to see the 5 top picks for stocks in September and beyond.
September is historically a weak month for stocks, although there is no real explanation for the pattern beyond statistical seasonality. Even the phenomenon has the nickname “September effect”.
Since 1945 S&P 500 In the ninth month of the year, it fell by an average of 0.7%, according to data from CFRA research, with little consensus as to why. The benchmark index has fallen more than 1% so far this month.
Market experts are divided on whether US stocks will repeat the pattern. Some, including economist Ed Yarden, are bracing for weaker results, while others think the market could buck the trend this time around.
Here’s where stocks are headed in September and beyond, according to the top 5 polls.
Ed Yardeni, President of Yardeni Research
“On Sunday, we noted that September is a good month for picking apples. It is widely seen as a rotten month for stocks, which is true for September 55% since 1928,” Yardeni said in a note to clients.
But while September is a sad month for stocks, it’s also a good opportunity to invest in cheap stocks ahead of what he calls the usual “year-end Santa Claus parade.”
Among the things that could go wrong for investors this month, Jordani cited rising oil prices, inflation and China’s slowing economy.
Tom Lee, head of research at Fundstrat
Optimistically, Fundstrat’s Tom Lee cited three reasons why the stock market may be bullish hang on In the weakest month in history.
The first is an analysis of current trends. According to Lee, since 1950, stocks have risen more than 10 percent through August, but declined in the first three days of September. In five of those eight months, stocks hit highs for the remainder of September.
“That’s why I don’t think you should give up,” he said.
Investors’ positioning trends in the options market also suggest that “this sell-off is coming to an end,” Lee said, pointing to a decline in U.S. stocks since early August.
Moreover, the fall in the price of used cars shows that the inflation rate is decreasing, he added. This could reduce pressure on the Federal Reserve to raise interest rates – which would be good for stocks.
“So the bottom line: the beginning of the month. It’s sad, but we’re looking hard at the first three days. [of September]”But it’s down doesn’t mean the rest of the month is written,” Lee said.
Bank of America
“The best setup for September and the rest of the year is when the S&P 500 is up between 10% and 20% from January to August,” said Bank of America technical strategist Stephen Suttmeier. He said in a memo Seen by Insider. The benchmark index gained about 17 percent in the first eight months of 2023.
“This is the situation for 2023,” Suttmeier added. The AI-powered rally so far this year has helped boost stocks, suggesting further rallies again, he continued.
Jeremy Siegel, “The Wizard of Wharton.”
After September, Siegel weighed On the long-term direction of stocks. The U.S. stock market remains strong and the housing market is currently struggling with rising mortgage rates, he said.
“Stocks are here to stay,” says a Wharton professor on “Behind the Market.” Podcast At the beginning of this month. That’s because inflation is falling, which means the Fed is less likely to raise interest rates.
Referring to the central bank’s upcoming policy meetings, “the chance that the Fed will raise the rate in September is now slim, and in fact a November hike is doubtful.”
David Rosenberg, founder of Rosenberg Research
In contrast, Rosenberg, a top economist, has long warned of a looming decline in stocks. He predicted that the US economy would plunge into a hole in the spring, leading to a 25% drop in the S&P 500.
“If this failure does not occur in the first quarter of next year,” he said He said recently “I wipe the egg off my face, and I write a report saying, ‘I was wrong, the business cycle is canceled after all,'” he says on the WTFinance podcast.
He added that Americans are running out of pandemic savings, and student debt payments are going to further squeeze consumers. “I think the batteries are going to die,” Rosenberg said. “Consumer failure is inevitable, the question is not just how bad it is, but whether it is,” he added.
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