We are in the midst of market turmoil.
Market volatility is unlikely to let up anytime soon. Data compiled by Trivariate Research shows that the S&P 500 has fallen an average of 1.3% in September since 1929. The firm also found that the benchmark’s overall volatility for the month was in the top four, with a standard deviation of 5.8%. August was also a volatile month, with the S&P 500 selling off to begin the period before the recovery. October was also volatile. The S&P 500’s standard deviation for the month was 6%. Sure, the S&P 500 rose an average of 0.5% that month. The difficult backdrop has even made some of Wall Street’s biggest bulls hesitant. “I think investors should be cautious over the next eight weeks,” Fundstrat’s director of research, Tom Lee, told CNBC’s “Squawk Box” on Tuesday. “The market has been up for seven out of eight months this year. So we know this is an extremely strong market. But we also had September [interest rates] cuts, and we have the election, which is going to make people nervous.” Wall Street has priced in a Federal Reserve rate cut later this month. The question is, how much will the central bank lower the cost of credit? New data due out this week could provide an indication on that front. The U.S. jobs report for August is due out Friday at 8:30 a.m. ET. Economists polled by Dow Jones expect the economy to have added 162,000 jobs last month. On Tuesday, the Institute for Supply Management will release its manufacturing activity index for August. Economists are forecasting a decline this month. “The level of uncertainty that all of this brings in our view presents both risks and opportunities for investors, who will need the courage of their convictions,” said John Stoltzfus, chief economist at Dow Jones. “The good news in our view is that the Federal Reserve has made it quite clear that it now plans to start cutting its benchmark interest rate sooner than expected, possibly as soon as the next FOMC meeting,” Bernstein said in a note. Elsewhere on Wall Street this morning, Bernstein raised its price target on Ferrari from $488 to $599, implying a 20% upside. “Since virtually every Ferrari is sold, the pace of deliveries and revenue and quarterly earnings recognition is entirely at Ferrari’s discretion, with only the final level of customization for each car being a small variable as customers can modify their orders up to fairly close to the actual production date,” wrote analyst Stephen Reitman.
