(Bloomberg) — Stocks edged up at the top of a wild August on Wall Street, with investors bracing for what’s historically referred to as the worst month for equities.

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For all of the whiplash in global markets just just a few weeks ago, things are looking reasonably calm. Equities saw mild moves on Friday, with the S&P 500 poised for its fourth consecutive monthly gain amid data showing the economy is holding up, while leaving the door open for the Federal Reserve to begin cutting rates in September. Whether a jumbo-sized reduction stays on the table, next week’s jobs report might bring some clues.

“As August involves an in depth, sentiment has calmed down significantly in comparison with the start of the month,” said Mark Hackett at Nationwide. “Lots of the larger concerns in the general economy have decreased. September may bring some seasonal challenges, but when investors can navigate through them, these challenges can turn into benefits within the fourth quarter.”

Since 1950, the S&P 500 has generated a median loss 0.7% in September and finished higher only 43% of the time, making it the worst month for stocks on a median return and positivity-rate basis, in line with Adam Turnquist LPL Financial. The last 4 Septembers have also been notably weak, with the index posting respective declines of 4.9%, 9.3%, 4.8%, and three.9%.

“Through the month, the index tends to trade sideways throughout the first half, with losses starting to build up into month end,” he said. “For this yr, the midway point also happens to line up closely with the September Fed meeting.”

The S&P 500 rose to around 5,610. Volume was thin ahead of Monday’s US holiday. The Nasdaq 100 added 0.7%. The Russell 2000 of small firms was little modified. Wall Street’s “fear gauge” — the VIX — dropped to around 15. That’s after an unprecedented spike that took the index above 65 throughout the Aug. 5 market selloff.

Treasuries fell, but were poised for his or her longest monthly winning streak since 2021. The dollar rose at the top of its worst month this yr. Oil sank as traders priced in expectations OPEC+ will proceed with previously announced output hikes within the fourth quarter.

Equity bulls were looking for to complete August “with a bang,” but bumped into selling pressure near all-time highs ahead of what’s historically been the worst month for equities, said Jose Torres at Interactive Brokers.

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Data from Bespoke Investment Group found that over the past 100 years, September also has by far been the worst month of the yr for the Dow Jones Industrial Average with a median decline of 1.24%. A Citigroup Inc. evaluation of information since 1928 suggests S&P 500’s average realized volatility for September has historically been 1.5 points above August, while October has been an extra 2.5 points higher.

There are just a few theories for why September tends to be a weaker month for stocks. For one thing, investors getting back from summer vacations are likely to reassess portfolio positioning defensively. Corporations prepare their budgets for the approaching yr and debate belt tightening. And mutual funds often engage in “window dressing” by selling positions at a loss to scale back the scale of their capital-gains distributions.

“Moreover, corporations entering a blackout period for share repurchases at the top of the third quarter can have their ability to support their share price impacted if the worth drops,” Hackett said.

For now, many traders are pinning their hopes on more data that can show the economy isn’t falling off a cliff, while inflation keeps marching toward the Fed’s 2% goal.

A report Friday showed US consumer sentiment improved for the primary time in five months as slower inflation and prospects for Fed cuts helped lift expectations about personal funds. The Fed’s preferred measure of underlying US inflation — the core personal consumption expenditures price index — rose at a light pace.

“This week’s numbers dispel worries a couple of recession and inflation,” said David Russell at TradeStation. “Goldilocks could possibly be here as Jerome Powell prepares to show the page.”

Powell said last week the time has come for the central bank to chop its key policy rate, affirming expectations that officials will begin lowering borrowing costs next month and making clear his intention to forestall further jobs cooling.

Just like the Fed, investors’ focus appears to be shifting from inflation to the labor market, and shortly all eyes shall be on next Friday’s monthly jobs report, said Bret Kenwell at eToro.

“Last month’s jobs report was an enormous miss, causing widespread worry that the Fed was too late to chop rates,” he noted. “One other big miss could increase speculation of a 50 basis-point cut vs. the present expectation of a 25 basis-point cut.”

Stock markets are more likely to profit again from good economic data, which is required for the rally to broaden out further beyond the tech sector, in line with Barclays Plc strategists.

The team led by Emmanuel Cau says the monthly US jobs data next week shall be the bellwether for confirming or refuting recession worries.

“Whether it is a foul print, little question equities would react badly given their level after the rebound,” they wrote. Alternatively, a better-than-expected figure would “help assuage those recession fears within the short run, and certain be good for equities.”

Swap contracts fully price in a quarter-point move and about 25% odds of the half-point cut forecast by not less than two large US banks. They proceed to almost fully price in a half-point rate cut in some unspecified time in the future this yr, anticipating cumulative easing of just about 100 basis points over the Fed’s three remaining policy meetings.

“The markets are actually awaiting next week’s job market figures, which should determine whether the Fed opens the speed cut ball with a 50 or 25 basis point cut – the difference between an emergency cut and a normalization cut,” said Florian Ielpo at Lombard Odier Investment Managers.

Money funds recorded inflows of about $24.5 billion within the week through Aug. 28, a fourth straight week of additives, in line with a note from Bank of America Corp., citing EPFR Global data. About $20.7 billion entered bond funds, while $13.7 billion flowed into stocks, the information showed.

US equities saw a ninth straight week of additives at $5.8 billion.

Corporate Highlights:

• Intel Corp. is working with investment bankers to assist navigate probably the most difficult period in its 56-year history, in line with people acquainted with the matter.

  • The corporate is discussing various scenarios, including a split of its product-design and manufacturing businesses, in addition to which factory projects might potentially be scrapped, said the people, who asked to not be identified since the deliberations are private.

• Dell Technologies Inc. reported better-than-expected revenue as a result of a rise within the sales of servers built for handling artificial intelligence workloads.

• Lululemon Athletica Inc. lowered its sales and profit outlook for the yr as increased competition and relentless inflation curb demand for its pricey yoga pants.

• Ulta Beauty Inc. trimmed its sales forecast as more US consumers reduce on makeup and cosmetics within the face of upper prices and elevated borrowing costs.

• Autodesk Inc. raised its full-year earnings outlook following pressure on the software maker from activist investor Starboard Value LP.

• Alnylam Pharmaceuticals Inc.’s trial of its drug to treat a deadly type of heart disease fell wanting investors’ expectations.

Among the primary moves in markets:

Stocks

• The S&P 500 rose 0.4% as of two:48 p.m. Recent York time

• The Nasdaq 100 rose 0.7%

• The Dow Jones Industrial Average was little modified

• The MSCI World Index rose 0.3%

• Bloomberg Magnificent 7 Total Return Index rose 0.8%

• The Russell 2000 Index was little modified

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.2% to $1.1054

• The British pound fell 0.3% to $1.3125

• The Japanese yen fell 0.8% to 146.11 per dollar

Cryptocurrencies

• Bitcoin fell 0.5% to $59,222

• Ether fell 0.2% to $2,534.84

Bonds

• The yield on 10-year Treasuries advanced 4 basis points to three.90%

• Germany’s 10-year yield advanced two basis points to 2.30%

• Britain’s 10-year yield was little modified at 4.02%

Commodities

• West Texas Intermediate crude fell 3.3% to $73.41 a barrel

• Spot gold fell 0.7% to $2,502.91 an oz

This story was produced with the help of Bloomberg Automation.

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