September has historically been the worst month for stocks.
According to CFRA, dating back to 1945, the S&P 500 has declined more than half the time in September, with an average return of -0.73%.
But before you get caught up in seasonal market trends, September may not be as bad as history predicts.
“When you’re up more than 10% for the year going into September’s normally troublesome month, it doesn’t perform that badly,” Ryan Detrick, chief market strategist at The Carson Group, told Yahoo Finance.
So what could surprise investors and become a positive market catalyst? Enthusiasm over AI, margined cash and Apple’s (AAPL) rumored brand-new iPhone could be enough to reverse September’s general downward trend.
AI hype boosts profits
AI enthusiasm fueled the market rally this year, with shares of AI-related stocks including Nvidia (NVDA), META (META), and Microsoft (MSFT) among the market’s best performers.
And it’s not just tech players who are benefiting from this hype. Companies across various industries have mentioned AI on earnings calls to emphasize how artificial intelligence could transform sectors including travel, healthcare and manufacturing.
And in September, AI could boost investor sentiment thanks to upcoming announcements from Microsoft, Meta and Salesforce (CRM). Microsoft and Meta are both set to hold events in September to show off their latest innovations in artificial intelligence, while Salesforce is expected to advance AI efforts at its annual Dreamforce conference.
“AI probably has no value,” Rhys Williams, chief strategist at Spouting Rock Asset Management, told Yahoo Finance about the opportunity to invest in artificial intelligence. “The AI story is great right now…we’re still in the early innings.”
Artificial intelligence will also likely be a topic at Goldman Sachs’ Communacopia and technology conference in September, where leaders in telecommunications, media and technology are expected to give insights on various AI investments.
investors have cash
More investors are holding cash or investing in cash-related products amid uncertainty over higher rates and the Fed’s monetary policy path.
And the additional cash could help the market gain momentum and gain further, said a strategist.
“With all this fear, I think people are underestimating the amount of cash that will account for the poor first half of the year,” Thomas Hayes, president of Great Hill Capital, told Yahoo Finance.
Money market fund total assets have increased dramatically this year, totaling $5.57 trillion as of August 23, according to the Investment Company Institute.
Read more: Best high-yield money market accounts for September 2023
Apple’s upcoming product schedule
Apple’s market value reaching $3 trillion earlier this year helped the Nasdaq 100 set a record first half of the year, and given the company’s dominance of the equity markets, an impressive lineup of products could be a positive catalyst. Is.
Apple’s next major product is set to be unveiled on September 12 at the tech giant’s headquarters in Cupertino, California. And while Apple hasn’t revealed details, Wall Street expects the company to launch new Apple Watches alongside its iPhone 15.
Apple CEO Tim Cook looks at a new iPhone 14 Pro during an Apple special event on September 7, 2022 in Cupertino, California. (Justin Sullivan/Getty Images)
“You’re seeing these little bursts of excitement in the market,” Johan Grahn, head of ETF strategy at Allianz Investment Management, told Yahoo Finance. “It could be a gadget, a major product push.”
Apple is under pressure to impress at its events. The tech giant snapped its seven-month winning streak in August after iPhone sales declined for the third consecutive quarter.
While only time will tell whether or not these factors will be enough to reverse the well-known “September Effect,” they give investors reason to believe that there is a chance the market could spring a surprise.
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