The worst month in the stock market – September – is soon to come. The
the index has averaged a 1 percent loss in September dating back to 1928, according to Dow Jones market data. The
posted its similar September loss since 1896. Obviously, this is the bad month for both indices. Last year, the stock fell 4.8% in September. And who can forget Lehman Brothers? And well, September 11?
There is much debate about the explanation of the September effect. Worrying signs for this September are more tangible. Indexes rose by double-digit percentage points from their 2022 lows in mid-June, lifted by cooling inflation and a cautious Federal Reserve. But the likelihood of a rate hike of three-quarters of a point in September has risen, with a half-point increase less likely.
Then there are oil prices that have crashed, putting extra money in consumers’ pockets. The price of West Texas Intermediate oil held in the low $90s a barrel, but rose last week on Saudi Arabia’s proposals to cut production. Oil’s multi-year peak reached earlier this year at over $100 is more than 10% above current levels. Oil prices were hit by China’s economic slowdown. But China has just cut its key interest rate, which could push prices up again. Similarly, the protracted war in Ukraine could push up energy prices again as winter approaches.
Equity strategist Julian Emanuel believes the market’s recent ability to rally despite rising interest rates will fade. The good news: September sales may have already begun. The Dow and S&P 500 have both declined since Aug. 20, with the latter down about 4%. Let’s get this over with.
The Federal Reserve Bank of Dallas released its Texas Manufacturing Outlook Survey for August. The consensus estimate is for a negative reading of 12.3, up about 10 points from July. Four out of five surveys of business conditions by regional Federal Reserve banks had at least one negative reading over the past two months, portending a significant slowdown in the manufacturing sector. Earlier this month, the New York Federal Reserve’s Empire State Manufacturing Survey reported its second-largest decline on record.
Bank of Montreal
Hewlett Packard Enterprise
reports quarterly results.
Employment office Statistics publishes the Job Vacancies and Labor Turnover Survey. Economists forecast 10.3 million job openings on July’s final business day, nearly 400,000 fewer than in June. Job openings remain historically high, but are off their peak of 11.9 million from earlier this March.
S&P CoreLogic released its Case-Shiller National Home Price Index for June. Home prices are expected to jump 19.5% year-on-year after rising 19.7% in May. Sales of new and existing homes have fallen sharply this year, but home prices remain near record highs.
The Conference Board published its consumer confidence index for August. The consensus call is for a reading of 96.5, up about a point from July’s reading of 95.7. The index has declined for three consecutive months.
ADP versions its national employment report. Economists forecast that the economy added 250,000 nonfarm payroll jobs in August. ADP changed its methodology, complicating comparisons with recent months.
Cos., MongoDB, Okta and
post quarterly earnings.
The Supply Institute Management publishes its Chicago Business Barometer for August. Economists had forecast a reading of 51, down roughly one point from July. July’s reading of 52.1 was the lowest level for the index since August 2020.
and Lululemon Athletica are holding conference calls to discuss quarterly results.
Census Bureau reports construction spending data for July. Total spending rose 0.2% monthly to a seasonally adjusted annual rate of $1.77 trillion. Construction spending fell 1.1 percent in June, the first decline since last September.
BLS Publications August jobs report. Nonfarm payrolls were expected to rise by 270,000, following a rise of 528,000 in July, more than double forecasts. The unemployment rate remained unchanged at a near-record low of 3.5%.
Write to Jacob Sonnenschein c [email protected]