September’s reputation as a black sheep in the stock market may not be as gloomy as it appears. Despite the historical records dating back to 1945 and showing a decline in the S&P 500 more than half the time in September, with an average return of -0.73%, experts suggest that this year might be different. Carson Group’s Chief Market Strategist, Ryan Detrick, points out that when the market is up over 10% for the year heading into September, its performance tends not to dwindle as much.

The potential game-changer this year could be an amalgamation of factors, including the hype around Artificial Intelligence (AI), the substantial amount of cash sitting on the sidelines, and the much-anticipated new product launch from tech giant, Apple. AI has been a significant driver of the market’s rally this year, with shares of AI-related stocks, including Nvidia, Meta, and Microsoft, being among the best performers. The AI trend is not limited to the tech industry; companies across various sectors are leveraging AI to transform their operations, creating a buzz that could boost investor sentiment in September.

September’s Stock Surprise: AI, Cash Reserve, and Apple’s Anticipation

Historical Stock Trends vs Current Market Scenario

September is infamously known as the worst month for stocks with the S&P 500 registering a decline more than half the time since 1945. However, this year might prove different, with experts suggesting that a year with over 10% gain going into September doesn’t perform as poorly. Despite the historical average return of -0.73% in September, Carson Group’s chief market strategist, Ryan Detrick, believes this year might surprise investors.

AI Hype as a Potential Market Catalyst

One of the significant factors that could reverse September’s usual downward trend is the growing excitement around Artificial Intelligence (AI). The market rally this year has been largely fueled by shares of AI-related stocks such as Nvidia, Meta, and Microsoft. Companies across various sectors, including travel, healthcare, and manufacturing, are benefiting from AI, as evidenced by their mention of AI on earnings calls. Upcoming AI announcements from Microsoft, Meta, and Salesforce in September could further boost investor sentiment.

Investors’ Cash Holding: A Hidden Asset

The uncertainty over the Fed’s monetary policy has led to more investors holding cash or investing in cash-related products. This excess cash could potentially help the market regain momentum and drive further gains. According to Thomas Hayes, chairman of Great Hill Capital, the amount of cash on the sidelines waiting to play catch-up is being underestimated. Assets in money market funds have soared this year, reaching $5.57 trillion as of August 23, as per the Investment Company Institute.

Apple’s Upcoming Product Event: A Game Changer?

Apple’s run to $3 trillion in market value earlier this year contributed significantly to Nasdaq 100’s record first half of the year. Now, Apple’s upcoming major product unveiling, expected to include the iPhone 15 and new Apple watches, could act as a positive catalyst for the markets. Despite a decline in iPhone sales for the third quarter in a row, an impressive product lineup could revive the market’s enthusiasm.

Conclusion

While the "September effect" is a well-known phenomenon, this year’s market conditions, fueled by AI hype, substantial cash reserves, and anticipation around Apple’s product event, provide reasons to believe in a potential upside surprise for investors. As always, time will be the final judge.

Disclaimer: This article is based on the source provided and should be treated as an opinion, not investment advice.