S&P 500 Defies September Slump Ahead of US NFP

Wall Street put in strong gains on Thursday with benchmark indices closing at the highest levels since mid-August, brushing aside September's reputation as the stock market's weakest month.

The S&P 500 climbed 1.06% to 7,747.94, its second straight day of gains as Treasury yields pulled back. The move comes hours before Friday's US non-farm payrolls report, the first major data point the Federal Reserve will weigh before its September 15-16 meeting.

Latest Market Moves

• The S&P 500 closed at 7,747.94 on Thursday, up 1.06%, and was last trading near 7,752 in early Friday dealing.
• The Dow Jones Industrial Average added 632 points, or 1.20%, to close at 53,699.
• The Nasdaq Composite rose 1.35% to 26,572, its strongest session of the week.
• The US 10-year Treasury yield fell 5 basis points to 4.75% after Fed Governor Christopher Waller signalled support for holding rates steady.

Rally Defies Historical September Weakness

September has a reputation problem.

Since 1928, it has delivered the weakest average return of any month, with the S&P 500 losing around 1.1% on average. This year's setup looks different.

August ended with the S&P 500 up 2.6%, its best August since 2021, leaving the index up 12.3% for the year and just 1.4% below its August 13 record of 7,798.99.

Worth noting: when August finishes positive and year-to-date gains sit between 10% and 17.5%, September has historically averaged a gain of around 1.0% rather than a loss. The index has also held above its 200-day moving average, a level that has separated stronger and weaker Septembers going back decades.

All Eyes on Today's NFP

Friday's jobs report is the next test.

Economists expect US employers added around 58,000 jobs in August, a rebound from July's surprise contraction of 23,000. The unemployment rate is forecast to hold at 4.1%, while annual wage growth is seen slowing to 3.1% from 3.2%.

The data lands two days after Waller said he would be inclined to keep rates on hold if inflation keeps cooperating, comments that helped pull yields lower and stocks higher on Thursday. A number close to consensus would likely reinforce that path, while a much weaker or stronger print could shift how the Fed's September 15-16 meeting plays out.

S&P 500: Breaking Free of the Channel

The chart shows the S&P 500 attempting to clear a three-week hurdle.

Since topping out at its August 13 record, the index had been sliding inside a descending channel on the 4-hour chart, testing the lower boundary near 7,620 in late August before turning back up. Thursday's rally pushed price back above the channel's upper trendline, with the index last near 7,752.

The zone between roughly 7,500 and 7,620 marks the range the index spent most of the second quarter consolidating in before breaking higher in early August, and it now underpins the broader advance as support.

The 14-period RSI has climbed to 69.5, just shy of the 70 level that typically flags overbought conditions. A clean break above the August high would put the index into uncharted territory, while a slide back under the channel's trendline would question whether Thursday's move can hold.

Source: SpreadEx | S&P 500, 4-Hour Chart