Watch out for September
S&P 500, Nasdaq modestly positive, Dow edges green
Cons Disc leads S&P 500 sector gainers; financials weakest group
Dollar, gold slip; crude off >1.5%; bitcoin rises
U.S. 10-Year Treasury yield falls to ~3.78%
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WATCH OUT FOR SEPTEMBER
Referencing violent shifts in sentiment in recent weeks with shifts from recession fears to soft landing hopes after every economic data release, Brian Belski, at BMO Capital Markets, notes that currently "the pendulum has swung in favor of optimism."
The company's chief investment strategist, in a research noted emailed out late on Tuesday, pointed to the benchmark S&P 500 .SPX reaching again toward its July records.
And once the market gets past September, he finds some reassurance for investors in the form of historical data and a broadening of market strength.
In the meantime, Belski cautions that there are challenges especially as "stocks are pricing in an almost perfect outcome at current levels."
For example, as Summer winds down investors enter a "notoriously weak seasonal period and are probably only one or two "bad" macro data points away from another respite."
Specifically, he points to September as a difficult month with the benchmark index registering an average loss of 0.7%, which is much weaker than February, the second weakest month, which has shown an average loss of 0.1% historically.
And in the last four years the losses have been much more pronounced than the average, with a 4.9% drop in Sept. 2023 and a 9.3% loss in Sept. 2022.
But, maybe in keeping with the spirit of violent sentiment swings we've seen so far, Belski points to very impressive fourth-quarter comebacks in the last few years after the weak Septembers with an average gain of 10.2%.
This includes a 11.2% Q4 gain for 2023 and a 7.1% gain for Q4 of 2022.
In the meantime Belski suggests an easing of concentration worries as the so-called Magnificent seven heavyweight group of stocks under performed the index in the most recent market rebound. With nearly 300 S&P 500 stocks recently outperforming the broader index, which is the highest in nearly two years, he points to a dramatic improvement in participation levels.
So the strategist suggests investors favor active selection of stocks with good growth and valuation profiles.
(Sinéad Carew)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
RETAIL DIVIDE WIDENS AS TARGET SOARS AND MACY'S TANKS - CLICK HERE
LABOR MARKET SOFTER THAN MANY THOUGHT, COOLING MORTGAGE RATES LEAVE BORROWERS UNIMPRESSED - CLICK HERE
S&P 500 NEARS ITS JULY RECORD HIGHS, BACKS OFF - CLICK HERE
NASDAQ COMPOSITE: TRADERS HOLD THEIR "BREADTH" - CLICK HERE
HAS THE DOLLAR'S WEAKNESS FURTHER TO RUN? - CLICK HERE
BAD MEMORIES OF SUMMER SELLOFF FADING - CLICK HERE
LEARNINGS FROM Q2: MORE CAUTION - CLICK HERE
MINERS SUPPORT THE STOXX - CLICK HERE
EUROPEAN FUTURES STEADY AS BOUNCE STALLS - CLICK HERE
JOBS IN FOCUS AFTER THE REBOUND - CLICK HERE
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