As September arrives, investors are often bracing for a historically rocky ride in the stock market. Over the years, this month has earned a reputation as one of the most difficult for stocks. But 2023 could be different.
What the numbers say:
Historical data dating back to 1945 shows that the S&P 500 has seen declines in September more than half the time, with an average return of -0.73%. However, this year’s story begins on a more optimistic note. With gains of over 10% for the year, experts believe September may not follow the script of previous years.
Ryan Detrick, chief market strategist at Carson Group, notes: “When you’re up over 10% in the year before the normally troubled month of September, you’re not doing too badly.”
AI Excitement: A Tipping Point
One of the main drivers of market dynamism this year has been the buzz around artificial intelligence (AI). Tech giants like Nvidia, Meta, and Microsoft have witnessed notable stock performance thanks to their involvement in AI.
But it’s not just limited to tech giants. The influence of AI extends to several industries, transforming sectors such as travel, healthcare and manufacturing. In September, AI-related announcements from industry leaders such as Microsoft, Meta and Salesforce could reinvigorate investor sentiment.
Rhys Williams, chief strategist at Spouting Rock Asset Management, sees a unique opportunity, saying: “AI is probably not priced in. The story of AI is fantastic at the moment and we’re still in the early stages.”
The Goldman Sachs Communication and Technology Conference in September is expected to shed more light on AI investments.
Cash reserves: a market recharger
With higher interest rates and uncertainty over the Federal Reserve’s monetary policy, more investors are keeping their funds in cash or cash-related products. This influx of cash reserves could potentially breathe new life into the market and drive higher profits.
Thomas Hayes, president of Great Hill Capital, highlights the importance of this cash influx, saying: “With all this fear, I think people are underestimating the amount of cash on the sidelines that has to offset poor performance in the first half of the year.”
As of August 23, total assets in money market funds had grown to $5.57 trillion, according to the Investment Company Institute.
Apple’s next big step:
Anticipation and pressure Apple, a giant in the technology world, is preparing for the launch of a major product on September 12. Although Apple has kept the details under wraps, industry experts are anticipating the introduction of the iPhone 15 and new Apple Watches.
Johan Grahn, head of ETF strategy at Allianz Investment Management, believes these types of events can spark market enthusiasm, noting: “It could be a device, a premium product push.”
However, Apple faces high expectations after a difficult August when iPhone sales fell for the third consecutive quarter. The upcoming event will be a pivotal moment for the tech titan.
In conclusion, While September typically presents a challenging outlook for the stock market, the convergence of the factors discussed above offers investors a ray of hope. This year could bring some unexpected surprises. Keep an eye on AI developments, cash dynamics, and Apple’s big reveal as September progresses.