Preparing for September Market Trends
As we near the end of summer and move into September, much changes. Children are back in school. The focus for many sports fans shifts from baseball to football. With this being an election year, we might see a heightened level of volatility between September and early to mid-November.
Seasonal Volatility Awareness
The month of September has been a rough month for the stock market over time. Over the past 95 years, the S&P 500 has posted gains for the month 42 times and losses 53 times. The average gain in the up months was 3.19% and the average loss was 4.70%.1
The “September Effect” refers to the historically poor performance of the markets during September. This goes back almost a century.
While we have no way of predicting how September will play out in 2024, there are a number of things happening beyond normal volatility in the markets. First, we have seen a lot of volatility this year. A number of sectors, perhaps most notably big tech, have seen some tremendous ups and downs so far in 2024.
Add to this the prospect of the Fed reducing interest rates and the normal volatility that we might expect due to the presidential election this year and you have all of the ingredients for a potentially volatile month in September. Whether it is volatile to the upside or downside remains to be seen of course.
Reassessing Investment Portfolios
As we move into September and into the end of the year, this is a good time to review and assess your investment portfolio. While 2024 has been a year of volatility at times, the major averages are up for the year so far.
In light of this, September is a good time to review your portfolio in the context of your long-term financial goals. Does your target asset allocation still fit with your financial goals, your time horizon and your risk tolerance?
Does your portfolio need to be rebalanced?? Not only has the stock market performed well so far in 2024, but bonds have as well in many cases. Rebalancing is always an important part of the portfolio review process, perhaps especially so as we move into a potential period of volatility like September and the months beyond due to the election and potential interest rate cuts by the Fed.
Beyond the markets, has anything changed in terms of your financial situation, especially in terms of your longer-term financial planning?
Staying Informed on Economic Indicators
September will have its share of normal economic data released. In addition to any economic data or indicators a key economic event will be the next Federal Reserve Open Market Committee meeting, scheduled for September 17-18. It is expected that the FMOC will be deciding on whether to cut interest rates for the first time in several years at this session. Another topic of this meeting will be a discussion of a summary of their current economic projections.2 ?
News reports have indicated that the Fed may be looking at multiple interest rate cuts in 2024. At this point this is simply the opinion of some industry experts and is not substantiated, but the speculation could create some uncertainty among investors.
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The FMOC will consider a number of economic indicators in their September meeting, including indicators surrounding: ?
These indicators, as well as a number of others, will help shape the FOMC’s decision on whether to lower interest rates in this and subsequent meetings.
While it is important to stay informed regarding these and other economic indicators, any decisions as to the configuration of your portfolio should generally be influenced by your longer-term needs. These include your age, your time horizon, risk tolerance and your specific goals.
Economic and market indicators can be important to monitor, but for most investors a long-term focus is the better approach to take. Trying to time your investing strategy based on market or economic indicators is difficult at best and often can lead to poor investing decisions.
Concerned about the direction of the markets and what this might mean for your portfolio? Contact your Wedbush financial advisor to discuss your portfolio, your investment strategy and how they both align with your long-term goals and your investing time horizon.
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Disclosure
Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.