There was a good little rally in the stock market last week, which could put an end to the pullback that started in late July. We’ll see if the rally can continue this week in the absence of any major economic reports and a holiday shortened work week.
This pullback has thus far been quite mild both in time duration and price drop, and it’s very possible that the stock market will continue to remain weak in September. Currently, the market seems a bit directionless as economic news has been in line with forecasts, which is neither exciting nor exceptional. An unexpected upside surprise would help get the market out of the late summer doldrums and this could come from the upcoming Fed meeting in two weeks, or it may have to wait for corporate earnings in the second half of October. If the Fed once again doesn’t raise interest rates in this next meeting it could be viewed as a strong signal that interest rate hikes are over with, in this cycle. This outcome would likely be viewed positively by investors and it could spark a rally. However, if this doesn’t happen, investors may have to wait until 3rd quarter corporate earnings season begins next month to provide a spark. It was forecasted at the beginning of 2023 that earnings would be the worst in the first half of the year and pick up in the second half.
Even with this pullback the overall upward trend that began October 13th of last year remains intact. This is the 4th pullback in that period and this frequency is inline with historical averages. It would also be inline with historical averages if the market regains its all-time highs by year end.
Photograph by: Nate Dumlao on Unsplash
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