WEEKLY MARKET UPDATE

September is historically the weakest month for stocks, but despite this week’s inflation data (CPI, PPI, retail sales) coming in a bit hotter than anticipated, markets proved very resilient, and the S&P 500 ended the week largely unchanged.  Energy continues to be a key piece of the recent inflation story as oil prices have risen for three straight weeks and Wednesday’s CPI report for August showed energy prices rose 5.6% from July, the biggest monthly increase since June 2022.  Investors, however, largely shrugged off the week’s inflation data, as metrics that excluded energy showed much more muted price pressures and Friday’s consumer sentiment survey indicated the lowest one-year inflation expectations (3.1% versus expectations of 3.5%) in over two years.  Ultimately, the market is pricing in only a 3% chance of another rate hike from the Federal Reserve next week (per CME FedWatch) and as long as investors believe we are close to the end of this tightening cycle, risk sentiment should benefit.

Sell Rosh Hashanah, Buy Yom Kippur?

Last year we highlighted an old Wall Street adage and Friday’s market action was notably consistent with this seasonal pattern.  The Jewish New Year, or Rosh Hashanah, starts Friday evening (September 15) and coincidently enough, the S&P 500 registered its first -1% daily decline in about a month on the very same day.  Yom Kippur, the holiest day in Judaism, falls on Monday, September 25, and per data from AlmanacTrader, since 1971 the Dow Jones Industrial Average (DJIA) has fallen on average -0.5% between these two holidays.  However, while this period is notoriously difficult, it should be noted that short-term pain has historically equated to compelling longer term gains, as Yom Kippur to Passover (next year Passover occurs on Monday April 22) is historically very strong, with the DJIA rising on average almost 7%.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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