Another Lousy September

September 29, 2023

For reasons that are not clear, September has historically been the worst month of the year for stock market performance.  It is the only month that has, on average, closed lower and it is the only month where the odds of closing lower are greater than the odds of moving higher.  We are always reminded history is simply a guide and not an absolute, but for September 2023 the guide was spot on.  The steady drumbeat of higher oil prices and rising interest rates that continued throughout the entire month weighed on equities.  One could say the market was priced for perfection and what we saw in September was anything but perfect.  The month began with a move lower and lost ground every week during the month. At the end of the month the S&P 500 had dropped 4.9% but is still up 11.7% for the year.  However, the more representative equal weighted S&P average lost 6.4% and is now nearly unchanged for the year!  Oil gained 9.3% during September and is now nearly 17% higher on the year and the interest rate on the 10-year Treasury moved up 12% to a 16 year high.  Higher interest rates tend to move the dollar higher so gold, priced in dollars, lost $100 in September.

The month began on Friday ahead of the Labor Day weekend and featured typical light pre-holiday trading with the S&P 500 little changed.  Higher oil prices and higher interest rates, that would become the feature of September, began right after Labor Day weekend and sent the S&P 500 to a first week loss of 1.1%.  The feature stories during the second full week of trading were back-to-back reports that rising oil prices caused both the CPI and the PPI to move higher in August for a second straight month.  The week ended with the S&P 500 shedding another .2%.  During the 3^rd full week, it was the same story, oil prices jumped to the highest level in 15 months and interest rates spiked to the highest level in 16 years.  Rising oil prices impact almost everything and make curbing inflation far more difficult.  Concerns about even more interest rate hikes from the Federal Reserve sent the S&P 500 down another 2.9%, its worst week of the month.  September closed with a back-and-forth week as some started to see value in beaten down shares.  At week’s end the S&P 500 was down another .7%, its 7^th down week in the last 9.

October has a bad reputation, as it has been the home of 3 of the worst market crashes in history.  However, over the last 50 years the average market return for October has been a fairly normal .4% and the market has closed higher 59% of the time.  The selling in September brought stock valuations down, but they are still well above historic norms.  Interest rates and oil prices are likely to continue setting the tone in October, both good and bad.   There will be no Federal Reserve Open Market committee meeting until Halloween and no rate announcement is expected until November 1.  Potential positive catalysts would include any decline in oil prices or interest rates, an end to the UAW strike or some resolution of the stalemate in Washington.  We will start to see the first Q3 earnings reports that may show how rising oil prices and interest rates are affecting the bottom line.  We have taken a cautious stance over the past few months and will continue that approach in the near term.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.