2023-08-27 12:45:14
(Repeat of scheduled column originally published on 25 August, unchanged) by David Randall NEW YORK, Aug 25 (Archyde.com) – U.S. equity investors brace for a potentially volatile September as the market faces economic reports key figures, a Federal Reserve meeting and worries regarding a potential government shutdown, in a month of historically weak stock performance. Since 1945, the S&P 500 fell an average of 0.7% in September, the worst monthly performance, according to the CFRA. The past few weeks have been volatile. The S&P 500, which has risen nearly 15% this year, has fallen more than 4% from its July 31 peak as investors reacted to weak China’s economy and higher stock yields. treasury bills that threatens to make equities less attractive (link). The market “is coming to a number of key inflection points at a time when the market is still nervous due to rising rates,” said Jack Janasiewicz, portfolio manager and senior portfolio strategist at Natixis Investment Manager Solutions. . The US non-farm payrolls report opens the month next Friday. A higher-than-expected August employment rate would likely rekindle inflation fears, while a much weaker figure might stoke concerns that Fed interest rate hikes are starting to kick in. crack the economy,” Janasiewicz said. Consumer price data scheduled for September 13 must follow a similar course to satisfy investors. The Fed’s monetary policy meeting on September 20 is another potential source of volatility: Fed Chairman Jerome Powell’s Friday (link) speech in Jackson Hole fueled expectations of another rate hike this year, although a decision in September was seen as less likely. “It looks like now is the time to sell offense and buy defense if you think September will be a bit more volatile than normal,” said Sandy Villere, portfolio manager at Villere & Co, which has invested in healthcare stocks such as Pfizer and Abbott Laboratories. Investors will also be watching the fate of some $82 billion in student loans held by the government, with repayments beginning in October. This situation might weigh on consumer spending ahead of the end-of-year holidays. Separately, the squabble over spending cuts (link) between hardline Republicans and centrist Republicans in the U.S. House of Representatives raises the risk of a fourth federal government shutdown in a decade if lawmakers don’t fail to reach an agreement by September 30, when funding ends with the end of the current fiscal year. Goldman Sachs analysts wrote this week that a government shutdown might directly reduce U.S. economic growth by regarding 0.15 percentage points for each week it lasts. Of course, bullish equity investors have been richly rewarded for ignoring potential pitfalls this year. The S&P 500 index rose despite the regional banking crisis in February, fears of a debt default in June and fears that the most aggressive pace of Federal Reserve interest rate hikes since the early 1980s dragged the economy into a recession and derailed corporate earnings growth. Some investors believe further gains might come from a resilient economy and continued enthusiasm for the commercial potential of artificial intelligence, fueled this week by chipmaker Nvidia’s strong earnings report (link) and the announcement of a $25 billion share buyback. Tim Hayes, head of global investment strategy at Ned Davis Research, expects a recovery in September. August’s decline resembled the 6% plunge seen between February and March this year, which put an end to “overoptimism” and put the market on a path to further progress, it said. he declares. “The correction started on the first day of the month, and it has now corrected the conditions that made it vulnerable,” Hayes said.
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