The stock market’s worst month – September – is soon upon us. The
index has lost 1% on average in September, dating back to 1928, Dow Jones Market Data says. The
Dow Jones Industrial Average
posted a similar loss in September dating back to 1896. It’s clearly been a bad month for both indices. Last year, shares fell 4.8% in September. And who can forget Lehman Brothers? And, well, September 11?
There has been much debate about explaining the September effect. More tangible are the troubling signs for September. The indices are up double-digit percentages since their low in mid-June 2022, thanks to cooling inflation and a cautious Federal Reserve. But the likelihood of a three-quarter point rate hike in September has increased, a half-point hike is less likely.
Then there are oil prices, which fell and put extra money in consumers’ pockets. The price of West Texas Intermediate oil has remained below $90 a barrel, but has risen in the past week on Saudi suggestions for a production cut. Oil’s multi-year high, which reached over $100 earlier this year, is more than 10% above its current level. Oil prices have been hurt by the economic slowdown in China. But China just cut a key rate, which could cause prices to rise again. Likewise, an ongoing war in Ukraine could push energy prices up again as winter approaches.
Equity strategist Julian Emanuel believes the market’s recent ability to rise despite rising interest rates will decline. The good news: September sales may have already started. The Dow and S&P 500 have fallen since August 20, with the latter falling about 4%. Let’s wrap it up.
the Federal Reserve Bank of Dallas releases its Texas Manufacturing Outlook Survey for August. Consensus estimate is for a negative 12.3 reading, about 10 points better than in July. Four of the regional Federal Reserve Bank’s five business conditions surveys have had at least one negative print in the past two months, suggesting a significant slowdown in the manufacturing sector. Earlier this month, the New York Fed’s Empire State Manufacturing Survey recorded its second-largest drop on record.
Bank of Montreal
Hewlett Packard Enterprise
report quarterly results.
The Bureau of Labor Statistics publishes the Survey Vacancies and Labor Turnover. Economists predict 10.3 million job openings on the last working day of July, nearly 400,000 fewer than in June. The number of job openings remains at an all-time high, but is not above the 11.9 million high of earlier in March.
S&P CoreLogic publishes its Case-Shiller National Home Price Index for June. House prices are expected to rise 19.5% year over year, after rising 19.7% in May. Sales of new and existing homes have fallen sharply this year, but house prices remain close to record highs.
The Conference Council publishes its Consumer Confidence Index for August. The consensus call is for a reading of 96.5, about a point more than the July 95.7 figure. The index has fallen for three months in a row.
ADP releases its National Employment Report. Economists predict the economy added 250,000 nonfarm jobs in August. ADP has changed its methodology, making comparisons with recent months difficult.
Cos., MongoDB, Okta and
release quarterly results.
The Supply Institute Management publishes its Chicago Business Barometer for August. Economists predict a position of 51, about one point less than in July. The July 52.1 reading was the lowest for the index since August 2020.
and Lululemon Athletica hold conference calls to discuss quarterly results.
The Census Bureau reports construction spending for July. Total spending increases 0.2% month over month to a seasonally adjusted annual rate of $1.77 trillion. Construction spending fell 1.1% in June, the first decline since September last year.
The BLS releases the August jobs report. Employment outside the agricultural sector is expected to increase by 270,000, after a rise of 528,000 in July, more than double forecasts. The unemployment rate remains unchanged at an almost historic low of 3.5%.
Write to Jacob Sonenshine at [email protected]