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The traditional September slump in the stock market has been less pronounced in recent years.
Photo by ANGELA WEISS/AFP via Getty Images
The stock market usually performs well right after the Federal Reserve’s annual symposium in Jackson Hole.
The first day of the Jackson Hole meeting usually spurs a strong short-term stock market performance, historically. The average move for
for the month following the first day of the meeting, rose 0.3%, on a 1978 basis, according to Dow Jones market data. The
average 0.5% gain while more volatile
average growth of 0.9%.
However, there are two caveats.
First, the stock market posted impressive gains this summer. All three indices rose by double digits in percentage terms from their year-end lows in mid-June. The main driver is investors who hope that declining rate of inflation can compel The Fed will slow the pace of rate hikes. If Fed Chairman Jerome Powell indicated in a speech on Friday that a half-percentage-point interest rate hike is most likely expected in September, rather than three-quarters of a point, stocks could continue to rally. But if Powell indicates that a three-quarter point hike is in the offing, the stock is likely to fall.
Second, the month of September is usually the worst stock market month of the year. The average move for the S&P 500 in September is down 1% dating back to 1928. The effect has been less pronounced in recent years. The market actually averaged a 0.7% gain in September in 2010, although it averaged a 4.3% decline in that month in 2020 and 2021.
Either way, investors will be mindful of factors that are specific to this year. The stock market is already enjoying a significant summer rally, and the question now is how quickly the Fed will raise rates from here.
Write to Jacob Sonnenschein at jacob.sonenshine@barrons.com