All anyone could talk about a month ago was the looming stock-market pullback in September. Turns out the exact opposite has come to fruition.
Analysts kept preaching how September was typically the market’s worst month of the year. But amid the gloom and doom, stocks have had the inverse reaction and raced higher this month, with the S&P 500 up about 8%, its best September performance since 1939.
But there are still six sessions remaining this month, so for all those bears still waiting for the September swoon, there’s some hope.
September’s strong performance to this point doesn’t necessarily mean it will close the month on an even higher note. Bespoke Investment Group posts the S&P 500′s 10 best September performances through Sept. 22, but notes that the index during those specific months has averaged a 1.2% decline for the remainder of September. The S&P 500 has posted positive returns for the rest of the month in only three out of the nine previous instances (not including 2010.)
Based on that data, the quick run-up this month may hit a speed bump, which is what happened today. Stocks closed slightly lower, with the Dow snapping its five-day winning streak, as the Fed’s deepening worries over deflation prompted a flight to safety. Gold hit another fresh high, while the dollar fell.
Whether this flight to safety marks the beginning of a new trend remains to be seen. But the fact that the Fed is still considering quantitative-easing measures doesn’t exactly bode well for the overall health of the economy.
That’s a big worry that shouldn’t sit well with equity investors.