As September approaches, U.S. stock investors are gearing up for what could be a volatile month. Historically, September has been a challenging period for the market, and this year is no exception. A combination of key economic data reports, a Federal Reserve meeting, and concerns over a possible government shutdown are contributing to the uncertainty that investors are facing.
September has historically been a challenging month for the stock market. Since 1945, the S&P 500 has experienced an average decline of 0.7% during this month, marking the worst performance of any month, according to CFRA. This trend highlights the potential for increased volatility and market fluctuations in September.
In recent weeks, the market has exhibited volatility. Despite being up nearly 15% for the year, the S&P 500 has retraced over 4% from its high on July 31. Factors such as weakness in China’s economy and a rise in Treasury yields, which could make equities less appealing, have contributed to this volatility.
Several key economic data reports are scheduled for September. The U.S. non-farm payrolls report, set to be released early in the month, could influence market sentiment. A stronger-than-expected employment reading might raise inflation concerns, while a weaker number could lead to worries about the impact of the Federal Reserve’s interest rate hikes on the economy.
The Federal Reserve’s monetary policy meeting later in September is also a potential source of volatility. Comments from Fed Chairman Jerome Powell in Jackson Hole have fueled expectations of another rate increase this year. While a September rate hike is seen as less likely, the meeting’s outcome could still impact market sentiment.
Investors are also keeping an eye on the possibility of a government shutdown. A feud between hardline and centrist Republicans in the U.S. House of Representatives raises the risk of a government shutdown if lawmakers cannot reach a deal by the end of September. Such an event could directly impact U.S. economic growth and add another layer of uncertainty to the market.
As September approaches, U.S. stock investors are navigating a landscape of potential challenges and uncertainties. Historical trends, recent market volatility, economic data reports, and the Federal Reserve meeting all contribute to the apprehension surrounding this month. While the market has shown resilience in the face of challenges this year, investors are proceeding with caution and closely monitoring developments that could influence market sentiment and performance.