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US equities typically post their worst performance of the year in September, but there are signs that the market may avoid a sharp downturn this time around.
This month was on average the worst for stocks since 1928, according to Yardeni Research. This is partly because, much like August, there is a lull in economic data that could catalyze a stock market rally. While investors tend to go on vacation in August, leading to lower trading volumes and therefore greater volatility, Labor Day usually signals the end of summer.
Mark Hackett, head of research at US investment firm Nationwide, says there are several indications that the the market is more stable this year than in 2022, when stocks sold off in the second half.
Since 1980, each time the S&P 500 has gained more than 6% through August, the rest of the year has been positive in every year except 1987, with an average gain of 5.4%, according to Hackett.
The general index ended July up more than 19% for the year, compared to a drop of 13% during the same period last year.
“There’s a lot to enjoy where we are,” Hackett said.
The market has been less reactive during recent Federal Reserve policy meeting days, he said. The S&P 500 has only been negative for two of the past eight months this year. CNN’s Fear & Greed Index, which examines seven indicators of market sentiment, is at 56, a “Cavity” reading, compared to a Reading “fear” of 40 a year earlier.
Even though stocks fell around 2% in August, they still outperformed their 4% loss in the same month last year. Stocks also ended the last week of August on a strong rally. The Dow Jones Industrial Average and Nasdaq Composite indexes posted their best weekly performance since July, while the S&P 500 posted its best gain since June.
However, there are still challenges ahead for the stock market.
Oil prices hit a nine-month high on Wednesday after Saudi Arabia and Russia, the world’s biggest crude exporters, said they would extend production cuts at least until the end of the year.
Some economists say a prolonged rise in energy prices could drive up inflation in services such as freight. Prolonged inflation could prolong the Federal Reserve’s fight to lower prices and, therefore, put more pressure on the US economy.
It could also put more strain on consumers’ wallets. Hackett said while consumer strength has remained resilient, which has helped fuel the economy, he is monitoring whether it remains that way.
He added that while he is cautiously optimistic that the market will remain strong through the end of the year, the rally’s overreliance on mega-caps technology stocks, such as Nvidia (up 222% this year) and Meta Platforms (up 148%), are a concern.
“At the end of the year, that’s when we have to reassess our expectations,” he said.
Over the weekend, intense rains and flooding stranded more than 70,000 people in Burning Man in the Nevada desert.
It’s the latest example of the impact of extreme weather, exacerbated by climate change, on top North American attractions this summer, reports my colleague Nathaniel Meyersohn.
The biggest theme park companies — Six Flags, SeaWorld and Cedar Point parent company Cedar Point — have all been rocked by extreme weather, including deadly flooding in the northeast, record-breaking heat in the southeast west and California and wildfires in Canada. Extreme heat in Florida has also disrupted attendance at Walt Disney World and Universal Orlando this summer.
These attractions are weather dependent and climate change poses significant risks to their operations. Theme parks are building indoor rides and changing their ticketing policies to respond to brutal weather conditions.
Learn more here.
For avid gamers across Asia, late-night sessions often mean drinking cans of Red Bull or munching on fast food to stay awake, CNN’s Jessie Yeung and Junko Ogura report.
But what about greasy fingerprints left on keyboards? Or the danger of keeping drinks near play equipment?
Noodle maker Nissin says it has the answer: Cup Noodles containing caffeine.
“The population of gamers in Japan is increasing year by year, especially among young people, and the number is believed to have exceeded 50 million,” the company said in a press release on Monday. “To meet this demand, Nissin Foods is launching for the first time in its history a new “gamer-friendly” product from its flagship Cup Noodles and Nissin Curry Meshi brands.
Learn more here.