Equities rebound barely as markets battle the September lull
The Dow Jones Industrial Average tried to rebound on Wednesday after a series of negative trading sessions in September.
The blue chip index rose 80 points, or 0.2%. The S&P 500 rose 0.2%. The Nasdaq Composite traded near the flatline.
Some bullish economic news released before the bell on Wednesday helped stabilize investor sentiment. The NY Fed’s Empire Index, a measure of the region’s manufacturing sector, came in at 34.3 in September, well ahead of FactSet’s consensus estimate of 18 and an August acceleration.
“Despite concerns over the recent slowdown in economic and economic momentum, we remain confident that strong growth is imminent and activity will pick up again,” JPMorgan strategist Dubravko Lakos-Bujas wrote in a statement on Wednesday. “We remain positive on the equity outlook and expect the S&P 500 to hit 4,700 by the end of this year and surpass 5,000 next year with better than expected gains.”
Microsoft shares rose about 1% after announcing a dividend increase and a sizeable $ 60 billion share buyback program.
Energy stocks, popular bets among investors hoping for a strong economic recovery, rose as WTI crude oil rose. Exxon added more than 3%.
Casino stocks like Las Vegas Sands and Wynn Resorts were down again on Wednesday. Those names were hit hard on Tuesday as the Macau government tries to tighten government controls on casinos and Chinese health officials reported an outbreak of Covid-19.
Markets have been panicked so far this month as investor worries grew over the next move by the Federal Reserve over the Delta variant that could wreck the economic recovery.
The S&P 500 had its worst day since August 20th on Tuesday. Tuesday marked the fifth consecutive loss day for the Nasdaq. The Dow, S&P 500, and small-cap Russell 2000 indexes were down six of the last seven days.
September was historically a weak month for the markets, which have seen an average decline of 0.56% per month since 1945, according to the CFRA. And after eight months of profits, strategists say a withdrawal could be imminent.
In September the Dow was down nearly 2% and the S&P 500 was down more than 1%. The S&P 500 is well on its way to seeing its monthly performance since October 2020.
The S&P 500 has risen throughout the year, falling only once below the 50-day moving average, according to Fundstrat. Mike Wilson, chief investment officer at Morgan Stanley, told CNBC’s Fast Money that this might just be the beginning.
“The mid-cycle transition always ends with a correction in the index,” he said of the S&P 500. “Maybe it will be this week, maybe a month from now. I don’t think we can handle this year. However, the 50-day moving average holds up year-round because that’s the pattern we usually see during this part of the recovery period. “