September Could Buck Historical Trend as Stocks Prepare for Potential Boost from AI, Cash on Sidelines, and Apple’s Upcoming Event
September has long been known as the worst month for stocks, with the S&P 500 declining more often than not during this period since 1945. According to CFRA, the average return for the S&P 500 in September is -0.73%. However, experts suggest that this year may be different.
“When you’re up over 10% for the year going into the normally troublesome month of September, it doesn’t do as poorly,” said Ryan Detrick, chief market strategist at Carson Group. This suggests that historical trends may not hold true this time.
One potential positive catalyst for the market in September is the excitement surrounding artificial intelligence (AI). AI-related stocks, such as Nvidia, Meta, and Microsoft, have been among the best performers this year. Companies across various industries have also been touting the transformative potential of AI in sectors like travel, healthcare, and manufacturing. In September, Microsoft, Meta, and Salesforce are expected to make announcements regarding their latest innovations in AI, which could further boost investor sentiment.
Artificial intelligence will also be a key theme at Goldman Sachs’ Communacopia & Technology Conference in September, where leaders in telecoms, media, and technology will provide insights into various AI investments. This indicates that AI may not be fully priced in, presenting an opportunity for investors.
Another factor that could drive gains in the market is the amount of cash held by investors or invested in cash-related products. With higher rates and uncertainty surrounding the Federal Reserve’s monetary policy, more investors are keeping cash on the sidelines. This excess cash could play a crucial role in regaining market momentum and driving further gains.
“There’s a chance that cash on the sidelines could play catch-up for underperformance in the first half of the year,” said Thomas Hayes, chairman of Great Hill Capital. The total assets in money market funds have reached $5.57 trillion as of August 23, according to the Investment Company Institute.
Lastly, Apple’s upcoming product event in September could also serve as a positive catalyst for the market. Apple’s dominance in equity markets, coupled with its impressive lineup of products, has the potential to boost investor enthusiasm. Analysts expect Apple to unveil its iPhone 15 and new Apple watches at the event, following a decline in iPhone sales for three consecutive quarters.
While it remains to be seen whether these factors will be enough to defy the historical September effect, investors have reason to believe that markets could surprise to the upside.