Even a cooler-than-expected core PCE reading— an increase of just 0.1% for the month! — couldn’t cheer investors.
Squeezed by September’s seasonality, stocks mostly fell Friday. The S&P 500 lost 0.27%, the Dow Jones Industrial Average fell 0.47%, but the Nasdaq Composite climbed 0.14%.
All three indexes ended September in the red. The S&P was down 4.87% and the Nasdaq fell 5.81% — both indexes’ worst monthly performance since December. The Dow lost 3.5%, its worst showing since February.
When viewed on a quarterly basis, the numbers are actually better, indicating how bad September was for stocks. The S&P retreated 3.65%, the Dow declined 2.62% and the Nasdaq sank 4.12%, its biggest fall since the second quarter of 2022.
A “deeply oversold condition is starting to develop,” Wolfe Research analyst Rob Ginsberg said in a Thursday note. Just 15% of stocks are trading above their 50-day moving average, said Ginsberg.
It’s an observation echoed by Adam Turnquist, chief technical strategist at LPL Financial. Turnquist noted that the relative strength index of the S&P — a measure of the momentum of stocks — slid to the lowest level in 12 months, suggesting stocks reached oversold levels this week.
While being oversold doesn’t guarantee stocks will bounce, that condition suggests stocks are cheap relative to their recent price range, making it “easier for [stocks] to go higher,” Katie Stockton, founder and managing partner at Fairlead Strategies, told CNBC. This might be a good time for intrepid investors to wade into the waters.
After all, October’s historically a winning month for stocks, according to data from the Stock Trader’s Almanac. Between 1950 and 2021, the S&P has ended October 0.9% higher on average. Here’s hoping October brings some relief to the scorching summer heat we’ve had to endure in markets.
