We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
“As an awful August gives way to an uncertain September, investors hope this month will confirm that the seemingly relentless rise in interest rates will end soon, meaning respite for both stocks and bonds.”
“But there are a few snags.”
This September is chock-full of risk events, including:
Central bank meetings
A G20 summit, and
Make-or-break macro data
Not to mention that it tends to be the worst month of the year for the mighty S&P500 share index.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Will September Be a Poor Month for U.S. Stocks?
Now the Federal Reserve's Jackson Hole confab is over, investors are strapping in for a potentially volatile month.
The S&P 500 tends to post its worst monthly performance in September, with an average decline of -0.7%, according to CFRA data going back to 1945.
There are plenty of catalysts for volatility. The Sept. 13th U.S. inflation reading would likely have to support the narrative of cooling consumer prices and resilient growth that has boosted stocks for most of the year.
Investors will also scrutinize the message from Fed Chairman Jerome Powell after the central bank's Sept. 20th meeting to determine the likelihood of another hike this year.
Meanwhile, there is a risk of a fourth federal government shutdown in a decade if squabbling lawmakers cannot reach a deal by Sept. 30th, when funding runs out with the end of the current fiscal year.
On the data front, U.S. services sector activity is due Wednesday.
(2) Germany Is the ‘Sick Economy’ in Europe Now
Germany looks likely to be the only major economy to contract this year.
Business activity there shrank at the fastest pace in over three years in August, business sentiment has deteriorated and the economy stagnated in the second quarter.
No wonder the region's economic powerhouse is once again being called the sick man of Europe.
July industrial orders and production data in the coming week may reinforce that perception, supporting the case for the ECB to leave rates unchanged in September.
Germany's coalition just agreed to a 7 billion euro ($7.56 billion) corporate tax relief package to give the economy what Chancellor Olaf Scholz called a "big boost.”
But economists are skeptical, noting that at just +0.2% of GDP, the package is no game-changer and that the sick will need more medicine.
(3) Any Bright Spots in the G20 Summit?
Some progress this summer on debt deals for the string of struggling emerging economies in, or facing, default has sharply driven up year-to-date returns for the sovereign bonds for Pakistan, Sri Lanka, Ghana and Zambia.
This bright spot could, during the G20 Summit in Delhi, support ongoing efforts to tackle the persistent, damaging debt crisis among developing nations.
Multilateral institutions and creditor countries have used most international gatherings to refine the Common Framework agreement that was meant to make recovering from debt distress quicker and easier.
But the absence of China’s President Xi Jinping in Delhi could cast a pall.
China has become the biggest bilateral lender to some developing nations in recent years, and its reluctance to make bigger concessions during restructuring efforts has been a core sticking point.
(4) Reserve Bank of Australia (RBA) Leadership Changes Hands
The Reserve Bank of Australia is set to hold rates steady for a third straight meeting on Tuesday, as Governor Philip Lowe prepares to pass the baton to deputy Michele Bullock.
A sharp cooling of inflation hints at an easier road for Bullock, after Lowe's controversy-filled legacy of painful backtracks and abrupt shifts that cost him a second term.
Rates are at an 11-year high of 4.1% after 400 bps of tightening since May 2022.
Traders expect that to be the peak, after inflation unexpectedly eased to a 17-month trough below 5% in July.
But it won't be all plain sailing.
Economic risks in top trade partner China are ramping up right as things at home look rosier.
(5) Will the Bank of England (BoE) Stop Hiking Its Policy Rate Shortly?
Is Britain's economy slowing enough for the Bank of England to end its battle against inflation?
U.K. retail sales for August, as measured by the British Retail Consortium on September 5th, may harden the view expressed in other surveys that consumers are deeply cautious.
Sentiment has soured alongside a slowing housing market, following 14 back-to-back rate increases. Monthly house price data from Halifax on September 7 will indicate whether the 9-trillion pound ($11.37 trillion) U.K. residential property sector has weakened further.
But the economy, which has defied recession forecasts, could still get a boost.
Headline inflation dropped to +6.8% in July, energy costs are set to fall from October and wage growth is now positive in real terms.
If this sends Brits flocking back to the shops, it could strengthen the BoE's resolve to stay tough on inflation.
Top Zacks #1 Rank (STRONG BUY) Stocks
Let’s look into three major U.S. industrial stocks, ones that made it onto our #1 list.
(1) Caterpillar (CAT - Free Report) : This is a $286 stock with a market cap of $146 billion. It is found in the Manufacturing – Construction and Mining Industry. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of B.
(2) General Electric (GE - Free Report) : This is a $114 stock with a market cap of $124 billion. It is found in the Diversified Operations Industry. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of D.
(3) Sherwin Williams (SHW - Free Report) : This is a $275 stock with a market cap of $70.7 billion. It is found in the Paints and Related Products Industry. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of D.
None of these stocks are cheap. You must pay up for quality here. No surprise there.
Key Global Macro
It looks to be a quiet 4-day trading week on the macro data front.
On Monday, there was a USA Labor Day holiday. Stock markets were closed there.
On Tuesday, there is an RBA policy rate decision from Australia. 4.1% is likely to stick.
U.S. total vehicle sales should be 15.7 million units annually in August.
On Wednesday, the global composite PMI for August should remain at 50.4. It remains slightly expansionary.
There is a Bank of Canada policy rate decision. They should stay pat at 5.0%.
On Thursday, Mainland China’s exports for August should be down -9.8% y/y, after being down -14.5% y/y in the month prior.
The Euro Area’s seasonally adjusted Q2 real GDP growth rate should remain flat at +0.6% y/y.
On Friday, we get the latest Baker Hughes U.S. domestic oil rig count. I see 512 rigs is the prior reading. That is still quite anemic.
Conclusion
The month of September has indeed proven to be a tricky month for stock traders, in times past.
Let’s see what September 2023 brings!
Happy trading and investing to all of you.
Warm Regards,
John Blank Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Will Stocks Rise in September? Global Week Ahead
In the Global Week Ahead, Reuters writes that…
“As an awful August gives way to an uncertain September, investors hope this month will confirm that the seemingly relentless rise in interest rates will end soon, meaning respite for both stocks and bonds.”
“But there are a few snags.”
This September is chock-full of risk events, including:
Not to mention that it tends to be the worst month of the year for the mighty S&P500 share index.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Will September Be a Poor Month for U.S. Stocks?
Now the Federal Reserve's Jackson Hole confab is over, investors are strapping in for a potentially volatile month.
The S&P 500 tends to post its worst monthly performance in September, with an average decline of -0.7%, according to CFRA data going back to 1945.
There are plenty of catalysts for volatility. The Sept. 13th U.S. inflation reading would likely have to support the narrative of cooling consumer prices and resilient growth that has boosted stocks for most of the year.
Investors will also scrutinize the message from Fed Chairman Jerome Powell after the central bank's Sept. 20th meeting to determine the likelihood of another hike this year.
Meanwhile, there is a risk of a fourth federal government shutdown in a decade if squabbling lawmakers cannot reach a deal by Sept. 30th, when funding runs out with the end of the current fiscal year.
On the data front, U.S. services sector activity is due Wednesday.
(2) Germany Is the ‘Sick Economy’ in Europe Now
Germany looks likely to be the only major economy to contract this year.
Business activity there shrank at the fastest pace in over three years in August, business sentiment has deteriorated and the economy stagnated in the second quarter.
No wonder the region's economic powerhouse is once again being called the sick man of Europe.
July industrial orders and production data in the coming week may reinforce that perception, supporting the case for the ECB to leave rates unchanged in September.
Germany's coalition just agreed to a 7 billion euro ($7.56 billion) corporate tax relief package to give the economy what Chancellor Olaf Scholz called a "big boost.”
But economists are skeptical, noting that at just +0.2% of GDP, the package is no game-changer and that the sick will need more medicine.
(3) Any Bright Spots in the G20 Summit?
Some progress this summer on debt deals for the string of struggling emerging economies in, or facing, default has sharply driven up year-to-date returns for the sovereign bonds for Pakistan, Sri Lanka, Ghana and Zambia.
This bright spot could, during the G20 Summit in Delhi, support ongoing efforts to tackle the persistent, damaging debt crisis among developing nations.
Multilateral institutions and creditor countries have used most international gatherings to refine the Common Framework agreement that was meant to make recovering from debt distress quicker and easier.
But the absence of China’s President Xi Jinping in Delhi could cast a pall.
China has become the biggest bilateral lender to some developing nations in recent years, and its reluctance to make bigger concessions during restructuring efforts has been a core sticking point.
(4) Reserve Bank of Australia (RBA) Leadership Changes Hands
The Reserve Bank of Australia is set to hold rates steady for a third straight meeting on Tuesday, as Governor Philip Lowe prepares to pass the baton to deputy Michele Bullock.
A sharp cooling of inflation hints at an easier road for Bullock, after Lowe's controversy-filled legacy of painful backtracks and abrupt shifts that cost him a second term.
Rates are at an 11-year high of 4.1% after 400 bps of tightening since May 2022.
Traders expect that to be the peak, after inflation unexpectedly eased to a 17-month trough below 5% in July.
But it won't be all plain sailing.
Economic risks in top trade partner China are ramping up right as things at home look rosier.
(5) Will the Bank of England (BoE) Stop Hiking Its Policy Rate Shortly?
Is Britain's economy slowing enough for the Bank of England to end its battle against inflation?
U.K. retail sales for August, as measured by the British Retail Consortium on September 5th, may harden the view expressed in other surveys that consumers are deeply cautious.
Sentiment has soured alongside a slowing housing market, following 14 back-to-back rate increases. Monthly house price data from Halifax on September 7 will indicate whether the 9-trillion pound ($11.37 trillion) U.K. residential property sector has weakened further.
But the economy, which has defied recession forecasts, could still get a boost.
Headline inflation dropped to +6.8% in July, energy costs are set to fall from October and wage growth is now positive in real terms.
If this sends Brits flocking back to the shops, it could strengthen the BoE's resolve to stay tough on inflation.
Top Zacks #1 Rank (STRONG BUY) Stocks
Let’s look into three major U.S. industrial stocks, ones that made it onto our #1 list.
(1) Caterpillar (CAT - Free Report) : This is a $286 stock with a market cap of $146 billion. It is found in the Manufacturing – Construction and Mining Industry. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of B.
(2) General Electric (GE - Free Report) : This is a $114 stock with a market cap of $124 billion. It is found in the Diversified Operations Industry. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of D.
(3) Sherwin Williams (SHW - Free Report) : This is a $275 stock with a market cap of $70.7 billion. It is found in the Paints and Related Products Industry. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of D.
None of these stocks are cheap. You must pay up for quality here. No surprise there.
Key Global Macro
It looks to be a quiet 4-day trading week on the macro data front.
On Monday, there was a USA Labor Day holiday. Stock markets were closed there.
On Tuesday, there is an RBA policy rate decision from Australia. 4.1% is likely to stick.
U.S. total vehicle sales should be 15.7 million units annually in August.
On Wednesday, the global composite PMI for August should remain at 50.4. It remains slightly expansionary.
There is a Bank of Canada policy rate decision. They should stay pat at 5.0%.
On Thursday, Mainland China’s exports for August should be down -9.8% y/y, after being down -14.5% y/y in the month prior.
The Euro Area’s seasonally adjusted Q2 real GDP growth rate should remain flat at +0.6% y/y.
On Friday, we get the latest Baker Hughes U.S. domestic oil rig count. I see 512 rigs is the prior reading. That is still quite anemic.
Conclusion
The month of September has indeed proven to be a tricky month for stock traders, in times past.
Let’s see what September 2023 brings!
Happy trading and investing to all of you.
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist