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Market Preview: A September to Dread

Written by: Michael Baron 08/27/12 - 5:45 PM EDT
Tickers in this article: AMZN SPY ^DJI ^GSPC ^IXIC AAPL PVH

NEW YORK (TheStreet) -- The end of summer is always bittersweet with kids across the country leaving the life of leisure behind to return to school. This year, though, investors may be dreading September's arrival as well.

Sam Stovall, chief equity strategist at S&P Capital IQ, sees "a calendar of concerns" ahead that could put the squeeze on equities after the strong rally since early June.

"Now, however, investors are faced with a wait-and-worry week that includes tropical storm Isaac, the Republican Convention, and the Jackson Hole symposium, before they can look forward to relaxing during the upcoming Labor Day weekend," Stovall said early Monday. "Then they have to contend with the S&P 500's performance in September, the weakest of all 12 months since 1990, 1970, 1945, 1929 or 1900."

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According to S&P Capital IQ data, the average performance for the S&P 500 in September since 1900 is a decline of 0.7%. Since 1929, the average drop for the index is 1.2%. In election years, the results have been better though with September showing roughly a flat performance since 1900, rising 15 times while falling 13 times.

Stovall doesn't anticipate either Federal Reserve Chairman Ben Bernanke or European Central Bank President Mario Draghi will provide much detail on potential monetary policy actions in their speeches at the end of this week.

He believes there are still too many meetings and datapoints ahead for either leader to show their hand just yet. Among the big upcoming events are the meeting of German Chancellor Angela Merkel and Spanish President Mariano Rajoy on Sept. 6 to discuss whether Spain will need additional bailout funds; the U.S. jobs report for August on Sept. 7, and the Fed's next policy meeting on Sept. 12-13, to name a few.

"We think there will be more analytical rhetoric surrounding these opaque statements in Jackson Hole than gale-force winds swirling around the Gulf of Mexico, as much still needs to be accomplished in September before either central bank president can reveal future plans to stimulate the U.S. economy or continue to protect the euro," Stovall explained.

For its part, Deutsche Bank expects Bernanke will try to maintain the status quo in his speech.