AI Stock APPL September High? Data Says So.
On Fri, 01 Sep - US market was off to a rousing start after the Non-Farm Payroll and Unemployment reports were released.
All 3 indexes were trending higher in the morning before it started fluctuating and ended mix at the end of the day.
DJIA: +0.33% (+115.8 to 34,837.71). Dow added +1.4% for the week, notching its best performances since July 2023.
S&P 500: +0.18% (+8.11 to 4,515.77).
Nasdaq: -0.02% (-3.15 to 14,031.81). Nasdaq added about +3.3% for the week. It was also its best weekly performances since July.
US Non-Farm Payroll
In August 2023, 187,000 nonfarm payroll jobs were added to the US economy (see above).
Data comes in higher than economists’ expectations of 170,000 jobs as polled by Bloomberg.
It is also higher (+19.11%) than July’s data of 157,000 jobs.
Over the last 12 months, job gains have averaged to 271,000 per month and US economy has exceeded this pace of hiring twice in the last 9 months.
August payrolls were stronger than expected, but were paired with notable downward revisions to June & July, showing a slower job growth trend.
US August - Unemployment rate
On a more upbeat note, August unemployment rate rose to 3.8% (see above).
It was upped by +0.3% from July’s unemployment rate of 3.5%.
Making August report, the highest unemployment rate since February 2022.
Economists expected unemployment to remain status quo at 3.5% as labour market continues to exhibit signs of cooling, based off the Bureau of Labour Statistics’s data.
This will be music to the Fed’s ears.
Again, Wall Street veterans are getting more confident that minimally for the Fed’s coming FOMC meeting in Sep 19-20, Central bank would be holding off an interest hike (see below).
CME FedWatch Tool - 31 Aug versus 01 Sep
WatchTool’s target rate probabilities on 01 Sep for interest rate remaining status quo was 93%.
It was gain of +4.0% for interest rate remaining unchanged, taken a day earlier.
Is it a battle of the wills between Wall Street and the Central bank?
S&P 500 - Historical performances for Sep to Dec - from 1960 to 2022
Above is S&P 500 past performances for the 4 months of Sep, Oct, Nov & Dec.
Since 1960 to 2022, the month of September have been the weakest when compared to the other 3 months - Oct, Nov & Dec (see above).
According to CFRA Research, even when we look further back to 1945 (for example), the S&P 500 has declined more than 50% of the time in September with an average return of -0.73%.
Here is where the “Principal of perspective” comes into play.
Reasoning put forth by Carson Group, Chief Market Strategist - Ryan Detrick is “when the S&P 500 has been up > 10% for the year, going into troublesome September month (with a -0.73% decline), it does not do so poorly”.
Agree, it does not look too shabby (for September) based on a hypothetical scenario underpinned by a pre-condition that market has been doing well for the months leading up to September no?
What Makes September 2023 Different?
(1) Official Data Released. (see above)
I have tabulated the above official reports (I have covered) into a summary table (see above).
Of the 8 reports, 7 have reported declining readings - that is good news to the Fed for it indicates a cooling economy.
The PCE report (to me) that is crucial registered an increased that should not be good news to the Fed. Yet market has found ways to justify the +0.1% increment.
The combination of slower job growth, a rising labor-force participation rate, and weaker earnings growth makes this a near perfect report from the Fed’s perspective.
(2) Artificial Intelligence Fever.
On 30 Nov 2022, chatGPT was officially launched.
In June 2023, it helped to pick Nasdaq up.
So far, the AI excitement are concentrated in the mega cap stocks only
Count $NVIDIA Corp(NVDA)$, $Microsoft(MSFT)$ and $Meta Platforms, Inc.(META)$ among the market’s best performers.
Companies across industries (Travel, Healthcare & Manufacturing) have jumped on the AI bandwagon by mentioning AI on earnings calls, highlighting how artificial intelligence can transform them.
In this month (September), AI could further boost investors’ sentiment.
On 05-05 Sep 2023, $Goldman Sachs(GS)$ Communacopia & Technology Conference will kick off and will feature C-level executives and other senior leaders from across the Tech, Internet, Media and Telecom landscape.
On 12-14 Sep 2023, $Salesforce.com(CRM)$ will hold its annual Dreamforce event that strives to bring the brightest mind together and see how AI + Data + Salesforce CRM + Trust is powering the world.
On 21 Sep 2023, Microsoft will be hosting a “special event” in New York. No details have been revealed yet but according to the grapevine, Microsoft may launch new generations of its Surface model.
On 27-28 Sep 2023, Meta Platform will be hosting Connect, its Annual event that showcases the company’s advancements in augmented and virtual reality.
(3) Apple’s 2023 Event.
During the AI-run this year, Apple’s briefly touched the $3 Trillion market capitalization value.
This indirectly helped Nasdaq 100 to post a record first half of the year.
It also gave Apple dominance in the US stock market.
For the coming event on 12 Sep 2023, an impressive lineup of products could just be the required jolt to help its stock price to a new high.
Although Apple has not disclosed any details, Wall Street is expecting the following products to make it debut its - (a) iPhone 15, (b) new Apple watches.
I strongly believed abovementioned factors will help to keep US market buoyant in September.
Referring to the “Principal of Perspective”, if US market falls in September is marginal, the net effect is market has risen in 2023.
The mega cap companies will still be the driving force behind all things AI.
Do you think US market will rise overall in September 2023?
Do you think it will be a tactical move to look for AI stock opportunities in September?
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Most estimates put AI as a 2 trillion dollar business by 2030. You can bet that NVDA will have a big share of it. By 2030 this is going to look like a great entry price at current levels.
I think MSFT will split this year as it marks 20yrs since the last split. I believe the announcement will come in December when the stock is at ATH.
I truly believe that this is one of the last opportunities to get in on NDVA before the ship sets sail
META recapture the 300 lvl and hopefully it can hold into closed.
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Meta p/e is low. This is a bargain.