Wall Street may want to go to sleep and wake up when September ends. The S & P 500’s record for the month has been terrible of late. Over the last five years, the benchmark has averaged a decline of 4.2% in September. It’s also fallen during the month in four of the last five years. Things don’t get much better when you go back further. The index has averaged a 2% decline in September over the last 10 years, posting a loss in six of those 10 instances. Investors are heading into the new month against an interesting backdrop for equities. The S & P 500, Dow Jones Industrial Average and Nasdaq Composite all hit record highs in August thanks in part to expectations that the Federal Reserve will ease monetary policy in September. There something else that could give stocks another tailwind into the historically tough period for Wall Street: Nvidia earnings. The chipmaker is set to report earnings after the bell Wednesday. Analysts expect sharp year-over-year profit and revenue growth from the company. Should this be the case, it could stabilize the recently faltering AI trade and propel the major averages to new highs as September begins. Traders at JPMorgan remain tactically bullish despite the stock market’s horrid September performance. “Nvidia could be the accelerant to animal spirits this week. The set-up is just perfect,” they said in a note. “The willingness to spend has broadened out to startups, sovereigns and enterprises, which lends confidence right out to 2028. This demand is latent as the industry is woefully supply-constrained, which has led to price hikes.” To be sure, stocks could follow the September trend of recent years if the Federal Reserve doesn’t deliver a rate cut mid-month after Chair Jerome Powell’s Friday Jackson Hole speech raised expectations for one. Traders are currently pricing in an 86% chance of a rate reduction in September, per the CME Group’s FedWatch tool. Two more cuts are also expected in October and December. Stocks surged Friday after Powell said it’s possible the central bank adjust policy next month. Tom Essaye of The Sevens Report, however, thinks the market may be getting a bit too excited. “Powell’s openness to a September rate cut allowed investors to enjoy this market environment, i.e. stable growth, some inflation pressures and the Fed still cutting rates in the coming weeks. That’s a positive recipe for stocks in the short term,” he wrote. “But the risk profile for this market has not changed be-yond the short term. And in reality, it’s probably a bit worse than it was. I say that because stagflation risks are actually rising, not falling.
Setting up for another awful September? The month’s track record has been abysmal in recent years
