As we step into September, it’s time to take a closer look at the current market landscape, reflecting on the month that was and the potential that lies ahead. The beginning of August felt like an eternity ago, with markets reeling from steep sell-offs triggered by a major event in Japan. But as we moved through the month, recovery set in, and now, as we enter September, the question on everyone’s mind is: What’s next?
August was nothing short of a rollercoaster. Early in the month, the S&P 500 was down by a staggering 7.3%, while the Dow and Nasdaq were down 5.4% and 10.7%, respectively. However, by the end of the month, the markets showed resilience. The S&P finished up 2.3%, the Dow gained 1.8%, and the Nasdaq managed to eke out a 0.7% increase. The significant recovery left many investors relieved, especially those who stayed the course and avoided panicked selling.
Historically, September hasn’t been kind to the markets. Since 1950, it has been the worst month for the S&P 500, with an average loss of 0.7%. The Dow hasn’t fared much better, averaging a 1.2% decline over the past 100 years. Yet, while history offers caution, it doesn’t dictate the future.
This September, the market’s direction could be influenced by several factors, including the start of the political advertising season post-Labor Day, the potential for a Federal Reserve interest rate cut, and the broader economic data. The Fed, in particular, is a focal point. If they proceed with a rate cut, it could buoy the markets further. The Fed has been a significant player in supporting the economy, and their actions in mid-September will be closely watched.
One of the key positives as we move into September is the market’s momentum. Despite the ups and downs, there’s a sense that the market is still on an upward trajectory. Investor sentiment, while cautious, isn’t overly bearish, and there’s still a considerable amount of cash on the sidelines that could be deployed into the markets.
However, it’s essential to remain vigilant. Market volatility, which we’ve experienced throughout August, could continue, and valuations are a concern. Are we overvalued? It’s a question worth asking as we head deeper into the month.
September is often a tricky month, but with the right strategy, it’s navigable. Keep an eye on the Fed’s decisions, monitor market momentum, and stay informed. Whether you’re planning for retirement or just trying to ride out the market waves, now is the time to review your portfolio and ensure you’re positioned for whatever lies ahead.