- NVDA
- ^GSPC
- GOOG
The S&P 500‘s performance in recent years and recent weeks has offered investors reason for optimism. Over these past few years, the famous benchmark has soared, led by companies involved in the high-growth artificial intelligence (AI) story. These tech giants, from Nvidia to Alphabet, have delivered revenue growth thanks to their AI investments and say this opportunity is far from over.
In more recent <a href="https://bitcomme.com/supporting-student-success-time-management/” title=”Supporting Student Success: Time Management”>times, investor interest has broadened into other sectors, from healthcare to consumer-oriented stocks. And better-than-expected second-quarter earnings reports from a great majority of S&P 500 companies have reinforced this momentum. About 87% of companies reported positive earnings per share surprises, while 77% reported positive revenue surprises, according to the FactSet Earnings Insight newsletter.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
All of this has helped the benchmark climb — even amid headwinds such as rising inflation and uncertainty about when the Federal Reserve will move on interest rates. Now, however, in the early trading days of September, some investors might be thinking more about the headwinds than the tailwinds. That’s because of the September Effect. Let’s check out what history tells us about investing during what’s generally been the worst month for stocks.
More often lower than higher
First, let’s start by considering the phenomenon known as the September Effect. Over time, the S&P 500 has often declined in September. In fact, since 1928, it’s the only month in which the benchmark has ended lower more often than higher And over that time period, the index declined an average of 1.1%, Citadel’s report showed
What’s the reason for this movement? No one has identified one clear explanation. Some suggest that institutional investors, aiming to lock in profits at the end of the quarter in preparation for year-end, may contribute to it. Others say that the simple idea of a weak September pushes investors to hit the “sell” button, and this keeps the cycle going.
In any case, September declines, when they do occur, aren’t linked to one specific, recurring event. And that means there isn’t really a reason to avoid stocks this month. Still, why invest right now if you know there’s a good chance that you may finish the month with a decline? Let’s consider what history has to say.
