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Zacks Investment Ideas feature highlights: Nvidia and Alphabet
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For Immediate Release
Chicago, IL – September 5, 2023 – Today, Zacks Investment Ideas feature highlights Nvidia (NVDA - Free Report) and Alphabet (GOOGL - Free Report) .
Buying Opportunities Abound? Here's What to Expect in September
Stocks kicked off the first trading day of September on Friday in mixed fashion, as the major indexes staggered between slight gains and losses in the early going.
Markets initially popped this morning following the release of the August nonfarm payrolls report, which presented a surprise jump in U.S. unemployment. The U.S. economy created 187,000 jobs in August, ahead of the 170,000 forecast, while the unemployment rate rose to 3.8% versus the 3.5% median expectation.
The data came after yesterday's release of the July Personal Consumption Expenditures (PCE) index figure, which showed that year-over-year core PCE – the Fed's preferred inflation gauge – increased 4.2%, the first time since January that the measure picked up.
Despite both the Nasdaq and S&P 500 breaking 5-month winning streaks in August, the bullish tech theme appears to have returned as the Nasdaq has managed to rise in each of the past 5 sessions, regaining key technical levels in the process. While volume has been fairly anemic during any rally attempts over the past month, the tech-heavy index has been driven higher by strong performance from several of the 'Magnificent Seven' stocks, including Nvidia and Google-parent Alphabet.
Nvidia is a Zacks Rank #1 (Strong Buy) stock, while Alphabet is currently a Zacks Rank #3 (Hold). Both companies have been outperforming this year and are part of leading industries.
A late-month rally helped to pare some of the losses in August, with both NVDA and GOOGL closing near 52-week highs (and all-time highs in the case of Nvidia). Here's what to expect in September as we head into the fall season.
September Brings More Weak Seasonality
The August-September timeframe is the weakest two-month stretch of the year from a historical perspective. Below is the data that backs this up; the graph shows the average S&P 500 performance by month dating back to 1950. As we can see, September is historically the worst month with a -0.7% average return.
With the Nasdaq paring August losses and rising in five consecutive sessions, it's easy to get caught up in the fact that momentum appears to have come back. But even in the most bullish of times, it's never a straight line up. And in the seasonally weak period of August and September, we need to be realistic about potential returns.
Unfortunately, even in strong pre-election years such as this one, September gets no respite from the normal selling pressure despite the positive underlying forces. The S&P 500 has averaged a -0.8% decline in pre-election years dating back to 1950. The Nasdaq has also averaged a -0.8% drop dating back to 1971.
Buying Opportunity Ahead?
Even though we are in the midst of a weak seasonal period, we need to keep the broader picture top of mind. The weight of the evidence that we have in hand at this point suggests a high probability that a new bull market is underway. This gives rise to the idea that this recent weakness in the market will be a 'buyable' pullback.
Let's also keep in mind that while the historical statistics presented above are certainly useful, markets are dynamic and have a way of surprising the majority of investors. A September rally is something that very few are expecting, and therefore we need to respect the possibility.
In fact, dating back to 1950, when the S&P 500 is up 10% or more year-to-date and experiences a negative August, the month of September has been higher 8 out of 10 times with a 2.6% median return. Not too shabby for the normally weak seasonal period, simply telling us to keep an open mind about a wide variety of potential outcomes.
Final Thoughts
A weak period from a seasonal perspective certainly warrants caution. But the stock market tends to surprise the masses, and with nearly everyone expecting more downside in the normally dreary month of September, we should be open to the idea of higher stock prices.
Growth stocks like NVDA and GOOGL have led the way this year, but other pockets of the market have shown strength as well. Homebuilders have been a bright spot outside of tech, while manufacturing stocks have also shown momentum.
Make sure you're taking advantage of all that Zacks has to offer as we make our way into September.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Nvidia and Alphabet
For Immediate Release
Chicago, IL – September 5, 2023 – Today, Zacks Investment Ideas feature highlights Nvidia (NVDA - Free Report) and Alphabet (GOOGL - Free Report) .
Buying Opportunities Abound? Here's What to Expect in September
Stocks kicked off the first trading day of September on Friday in mixed fashion, as the major indexes staggered between slight gains and losses in the early going.
Markets initially popped this morning following the release of the August nonfarm payrolls report, which presented a surprise jump in U.S. unemployment. The U.S. economy created 187,000 jobs in August, ahead of the 170,000 forecast, while the unemployment rate rose to 3.8% versus the 3.5% median expectation.
The data came after yesterday's release of the July Personal Consumption Expenditures (PCE) index figure, which showed that year-over-year core PCE – the Fed's preferred inflation gauge – increased 4.2%, the first time since January that the measure picked up.
Despite both the Nasdaq and S&P 500 breaking 5-month winning streaks in August, the bullish tech theme appears to have returned as the Nasdaq has managed to rise in each of the past 5 sessions, regaining key technical levels in the process. While volume has been fairly anemic during any rally attempts over the past month, the tech-heavy index has been driven higher by strong performance from several of the 'Magnificent Seven' stocks, including Nvidia and Google-parent Alphabet.
Nvidia is a Zacks Rank #1 (Strong Buy) stock, while Alphabet is currently a Zacks Rank #3 (Hold). Both companies have been outperforming this year and are part of leading industries.
A late-month rally helped to pare some of the losses in August, with both NVDA and GOOGL closing near 52-week highs (and all-time highs in the case of Nvidia). Here's what to expect in September as we head into the fall season.
September Brings More Weak Seasonality
The August-September timeframe is the weakest two-month stretch of the year from a historical perspective. Below is the data that backs this up; the graph shows the average S&P 500 performance by month dating back to 1950. As we can see, September is historically the worst month with a -0.7% average return.
With the Nasdaq paring August losses and rising in five consecutive sessions, it's easy to get caught up in the fact that momentum appears to have come back. But even in the most bullish of times, it's never a straight line up. And in the seasonally weak period of August and September, we need to be realistic about potential returns.
Unfortunately, even in strong pre-election years such as this one, September gets no respite from the normal selling pressure despite the positive underlying forces. The S&P 500 has averaged a -0.8% decline in pre-election years dating back to 1950. The Nasdaq has also averaged a -0.8% drop dating back to 1971.
Buying Opportunity Ahead?
Even though we are in the midst of a weak seasonal period, we need to keep the broader picture top of mind. The weight of the evidence that we have in hand at this point suggests a high probability that a new bull market is underway. This gives rise to the idea that this recent weakness in the market will be a 'buyable' pullback.
Let's also keep in mind that while the historical statistics presented above are certainly useful, markets are dynamic and have a way of surprising the majority of investors. A September rally is something that very few are expecting, and therefore we need to respect the possibility.
In fact, dating back to 1950, when the S&P 500 is up 10% or more year-to-date and experiences a negative August, the month of September has been higher 8 out of 10 times with a 2.6% median return. Not too shabby for the normally weak seasonal period, simply telling us to keep an open mind about a wide variety of potential outcomes.
Final Thoughts
A weak period from a seasonal perspective certainly warrants caution. But the stock market tends to surprise the masses, and with nearly everyone expecting more downside in the normally dreary month of September, we should be open to the idea of higher stock prices.
Growth stocks like NVDA and GOOGL have led the way this year, but other pockets of the market have shown strength as well. Homebuilders have been a bright spot outside of tech, while manufacturing stocks have also shown momentum.
Make sure you're taking advantage of all that Zacks has to offer as we make our way into September.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.