Market Fluctuations and Investor Worries in September
September is infamous for unsettling investors, and this year proves to be no different. Traditionally, it’s been a challenging month for market performance, and last week’s results only solidified that reputation. The S&P 500 plummeted 4.3%, suffering its largest weekly drop since September 2022, while the Nasdaq Composite fell 5.77%, its steepest decline since January 2022. The market is evidently under strain, and the causes can be identified in two main areas.
First, there’s a rising apprehension regarding a slowdown in the U.S. economy. Although it hasn’t yet entered contraction, several significant indicators are raising red flags. Second, all eyes are focused on the Federal Reserve, with traders and investors anxiously anticipating its interest rate decision. With the Fed’s upcoming meeting still a week away, the markets are left in a state of uncertainty.
September has a history of unpredictability. From 2014 to 2023, stock prices have dropped in September on seven occasions. According to the Stock Traders Almanac, it has been the worst month for equities since 1950. Nonetheless, despite the recent downturns, the retreat from this year’s highs has been relatively slight. The S&P 500 has decreased by 4.6% since its intraday peak in July, while the Dow has fallen only 3% since its late August high.
In contrast, the technology-focused Nasdaq and Nasdaq-100 tell a different story. The Nasdaq is down 10.6% from its 52-week high in July, officially entering correction territory. The Nasdaq-100 has fared worse, dropping nearly 11% from its peak. These drops were somewhat anticipated, as both indexes were overbought in early July, making them susceptible to short-selling. For instance, Nvidia has plummeted 27.3% since its June peak.
For Australian investors, the volatility in U.S. markets serves as a reminder of the interconnected nature of global finance. Although the ASX operates within its own dynamics, the influence of Wall Street is unmistakable. The uncertainty surrounding the U.S. economy and the Fed’s future actions will likely keep markets tense, both domestically and internationally.
Upcoming Events and Reports to Monitor in the Next Week
As we look forward, the upcoming week presents several key events that could provide essential direction to the markets. To begin with, Oracle is scheduled to release its earnings report on Monday, emerging as one of the few major companies reporting during a generally sparse earnings calendar. Market observers will closely monitor Oracle’s performance due to its substantial year-to-date gains of 34.5%. The company is predicted to announce earnings of .32 per share, a rise from .19 a year ago, with revenue estimated to be .2 billion. For perspective, Oracle has demonstrated exceptional performance, with its shares merely 3.3% shy of their 52-week high, starkly contrasting with Nvidia’s 27% decline from its peak.
Australian investors should watch Oracle’s results closely, as the company’s cloud computing and database services are vital to numerous sectors, including finance, healthcare, and retail. A robust report could boost tech stocks globally, including those on the ASX, which have faced headwinds recently.
Another noteworthy event is Apple’s eagerly awaited product launch titled “It’s Glowtime.” The tech giant is expected to reveal new iPhone models, updates to the Apple Watch, and possibly some innovations in artificial intelligence. Apple’s stock has performed well, rising 14.7% in 2024, and its product releases often create significant market excitement. While the direct influence on the ASX may be minimal, the larger tech sector could witness some shifts, especially if Apple’s new offerings surpass expectations.
In addition to these corporate happenings, two critical economic reports are due in the U.S. next week: the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday. Both reports are significant as they offer insights into inflation trends, which will impact the Federal Reserve’s forthcoming interest rate decisions. Should inflation figures come in lower than anticipated, it could alleviate fears about further rate hikes, potentially lifting both U.S. and Australian markets.
For Australian investors, the CPI and PPI reports are particularly significant given the Reserve Bank of Australia’s perspective on interest rates. While the RBA has currently halted its rate hikes, any indication of easing inflation in the U.S. could support the view that central banks worldwide are nearing the conclusion of their tightening phases. This might offer some relief to sectors such as real estate and consumer discretionary, which have been adversely affected by escalating rates.
Finally, two additional companies to keep on the radar are GameStop and Adobe. GameStop, the video-game retailer, has seen its shares increase by 36% this year, but the consensus estimate for this quarter indicates a loss of 8 cents per share, an improvement from a loss of 3 cents a year prior. Revenue is forecasted to contract by 23% to 5 million. Conversely, Adobe is anticipated to report strong earnings of .62 per share, up from .98 a year ago, with revenue estimated at .4 billion. Adobe’s performance will be a significant indicator for the broader tech sector, particularly in areas like digital imaging and cloud computing, which are increasingly essential for Australian businesses aiming to enhance their digital capabilities.
