Will the upsurge in stock prices continue through September? asks chief investment strategist Sam Stovall in CFRA Research's flagship newsletter, The Outlook.
Fear and greed are the two emotions that drive stock prices, at least in the near term. Yet, in this day and age of instant information, investors can experience both fear and greed at the exact same moment.
Today, global macro concerns have increased as a result of many factors, most recently from the Kabul catastrophe and the reimposition of social restrictions due to the spike in Delta cases. In addition, uncertain investors seem to be picking petals from a daisy, attempting to foretell whether the Fed will start to taper or won’t start to taper before year-end.
Despite a deterioration in technicals, as represented in the diverging of momentum and breadth for individual stocks versus the broader benchmarks, the U.S. equity markets have doggedly climbed this wall of worry.
The longer this condition persists, however, the more likely the market is to correct, advises Lowry Research, a CFRA business. And the S&P 500’s track record in September only adds to this concern.
September has been the worst month of the year on average for the S&P 500. Since 1945, the S&P 500 posted an average decline in September, joining February as the only months to log losing performances.
In addition, the S&P 500 fell more frequently than it rose, gaining only 45% of the time, the lowest rate of any month. Since 1995, small- caps and value stocks have eked out an average price advance, while large- and mid-caps, along with the Nasdaq and the S&P growth index have declined.
Finally, 57% of the 103 sub-industries in the S&P 1500 that have been in existence for at least 20 years also slipped in price. This year, equity markets may be equally challenged by such historical seasonality patterns.
Representative companies from the list of S&P 1500 sub-industries with the highest returns in September are: Nike (NKE), Akami Technologies (AKAM), Newmont Corp. (NEM), Everest Re (RE), Essential Utilities (WTRG), Best Buy (BBY), West Pharmaceutical Services (WST), and Consolidated Communications (CNSL).