The forecast for the market is cloudy at best—and there are no meatballs involved. Questions about the strength of the economy, what the Federal Reserve plans to do next, and even the path of corporate earnings won’t be answered for months, leaving certainty-starved investors feeling like they’re walking on quicksand. It’s a good time to buy stocks anyway.
There was a lot to dislike about the past month. Over those 30 days, stock investors have had to contend with a “hawkish pause” by the Fed, a looming federal government shutdown, a jump in bond yields, and rising oil prices. No wonder just 27.8% of respondents in the American Association of Individual Investors sentiment survey described themselves as bullish—the lowest level in four months.
The data back them up. In this September’s first 20 trading days, the S&P 500 hit an intraday low below the prior day’s intraday low 15 times, including a stretch of nine straight days of selling pressure. That many days of lower lows in such a short span had only occurred 14 times since 1993 before this September—and, according to Bespoke, the index was higher 79% of the time three months later, by an average of 8.1%.
Read More Trader On the fundamental side of things, the third-quarter earnings season begins on Oct. 13, when JPMorgan Chase and other large banks report. Analysts expect to see a modest 2% year-over-year increase in S&P 500 earnings per share—but that’s after three straight quarters of negative or no growth. Not-bad results would help keep 2024 expectations for 12% earnings growth aloft.