Here’s why stocks may surprise to the upside in September

September is traditionally the worst month for shares.

Wanting again to 1945, the S&P 500 has declined greater than half the time in September, in keeping with CFRA, with a median return of -0.73%.

However earlier than you get caught up in seasonal market developments, September may not be as dangerous as historical past predicts.

“Whenever you’re up over 10% for the 12 months going into the usually troublesome month of September, it does not do as poorly,” Carson Group chief market strategist Ryan Detrick informed Yahoo Finance.

So what might shock traders and be a optimistic market catalyst? Pleasure round AI, money on the sidelines, and Apple’s (AAPL) rumored brand-new iPhone could also be sufficient to buck September’s regular downward development.

AI hype fuels good points

AI pleasure fueled the market’s rally this 12 months, with shares of AI-related shares together with Nvidia (NVDA), Meta (META), and Microsoft (MSFT) among the many market’s greatest performers.

And it’s not simply tech gamers benefiting from the hype. Firms throughout industries have jumped on the bandwagon by mentioning AI on earnings calls, highlighting how synthetic intelligence can rework sectors together with journey, healthcare, and manufacturing.

And are available September, AI might supply a lift to investor sentiment, thanks to imminent bulletins from Microsoft, Meta, and Salesforce (CRM). Microsoft and Meta are each set to carry occasions in September to indicate off their newest improvements in synthetic intelligence, whereas Salesforce is predicted to additional tout AI efforts at its annual Dreamforce convention.

“AI might be not priced in,” Spouting Rock Asset Administration chief strategist Rhys Williams informed Yahoo Finance concerning the alternative to spend money on synthetic intelligence. “The AI story is terrific proper now. … We’re nonetheless within the early innings.”

Synthetic intelligence will seemingly be a theme at Goldman Sachs’ Communacopia & Expertise Convention in September too, the place leaders throughout telecoms, media, and expertise might give perception on numerous AI investments.

Buyers holding money

Extra traders are holding money or investing in cash-related merchandise amid greater charges and uncertainty over the Fed’s path of financial coverage.

And extra money might assist the market regain momentum and drive additional good points, one strategist mentioned.

“With all of this concern, I feel persons are underestimating the amount of money on the sidelines that has to play catch-up for underperformance within the first half of the 12 months,” Nice Hill Capital chairman Thomas Hayes informed Yahoo Finance.

The full belongings in cash market funds have risen dramatically this 12 months, totaling $5.57 trillion as of Aug. 23, in keeping with the Funding Firm Institute.

Learn extra: The perfect high-yield cash market accounts for September 2023

Apple’s upcoming product occasion

Apple’s run to $3 trillion in market worth earlier this 12 months helped the Nasdaq 100 publish a report first half of the 12 months, and given the corporate’s dominance in fairness markets, a formidable lineup of merchandise may very well be a optimistic catalyst.

Apple’s subsequent main product unveiling is about for Sept. 12 on the tech large’s headquarters in Cupertino, Calif. And whereas Apple has not disclosed particulars, Wall Road is anticipating the corporate to debut its iPhone 15 in addition to new Apple watches.

Apple CEO Tim Cook looks at a new iPhone 14 Pro during an Apple special event.

Apple CEO Tim Prepare dinner seems at a brand new iPhone 14 Professional throughout an Apple particular occasion on Sept. 7, 2022, in Cupertino, Calif. (Justin Sullivan/Getty Photographs)

“You see these small spikes of enthusiasm out there,” Allianz Funding Administration head of ETF technique Johan Grahn informed Yahoo Finance. “It could be a gadget, a first-rate product push.”

Apple is beneath strain to impress at its occasion. The tech large snapped its seven-month win streak in August after iPhone gross sales declined for the third quarter in a row.

Whereas solely time will inform whether or not or not these components will likely be sufficient to upend the well-known “September impact,” they provide traders motive to imagine there’s an opportunity markets might shock to the upside.

Seana Smith is an anchor at Yahoo Finance. Comply with Smith on Twitter @SeanaNSmith. Recommendations on offers, mergers, activist conditions, or the rest? Electronic mail seanasmith@yahooinc.com.

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