No regular edition this week with Monday’s Labor Day holiday, but I didn’t want to let a week go by without comment, so I’m using the pause to lay out what I’m watching for the month ahead.
The S&P 500 enters September at a record high — 7,718, up roughly 13% year-to-date after its 27th record close of the year — fresh off a blowout August jobs report. September also happens to be the market’s historically worst month, and this year that seasonal headwind runs straight into a live Fed decision, a reaccelerating inflation print, and a fresh round of AI earnings tests.
The Jobs Report: Strong, But Complicated
- The headline: payrolls rose 162,000 in August, more than double the roughly 55,000 economists expected and the best month since March.
- Under the hood: the unemployment rate held steady at 4.1%, and June and July were revised up a combined 55,000 jobs.
- My take: the labor market looks a lot more resilient than the “slowdown” narrative suggested a month ago which means the Fed is likely in neutral stance (no rate cut hopium).
This Week’s Inflation Test
Two inflation reports before the Fed meeting on the 16th: PPI on Thursday, CPI on Friday, both for August.
- CPI: consensus expects headline inflation to reaccelerate to +0.4% month-over-month, up from just +0.1% in July, with the year-over-year rate holding at 3.4%. Core CPI is expected at +0.2% month-over-month — a steady but slower pace.
- PPI: expected to show a similar jump, to +0.4% from 0.0% the prior month.
- My take: if both prints come in hot, the conversation shifts to whether the Fed needs a rate hike. Oil prices are back at $90 so we could see a reversal of the progress made over the summer, but I think it very low probability that they raise rates.
The Fed and the Yield Curve
- The meeting: the FOMC meets September 15–16 and economists are calling for a hold.
- But the futures market disagrees: after Friday’s jobs report, the odds of a rate hike increase was priced into Fed funds futures which jumped noticeably.
- Chair Warsh’s posture: he’s told markets to wait for this week’s data before drawing conclusions — consistent with his Jackson Hole remarks about scaling back forward guidance.
September Seasonality: Worth Watching, Not Panicking Over
It’s worth knowing what history says about September as it has a bad reputation:
- The headline stat: since 1928, the S&P 500 has averaged roughly a 1% decline in September — its worst calendar month, and the only one that finishes positive less than half the time (44% of years since 1950).
- But trend matters more than the calendar: when the index enters September above its 200-day moving average, as it does today, the average return improves to +1.3%, with gains 60% of the time. Below the 200-day average, it’s closer to -4.2%.
- The 2026 wrinkle: this is also a midterm election year. Since 1974, the S&P 500 has averaged a 1.7% gain from August 1 through Election Day. After election day we have seen gains of 5.7% in the following three months and 12.4% over the next six. This shows that political uncertainty has historically resolved into a tailwind, not a headwind, once the results are known.
Earnings to Watch: The AI Capex Test
- Oracle and Adobe both report Thursday, September 10. For Oracle, the number that matters is its cloud backlog — $638 billion as of May — and whether it’s converting into real, cash-generative revenue rather than just funding a bigger data-center bill.
- Micron closes out the month on September 30, a read on memory demand tied directly to the AI buildout.
- Costco, Kroger, and a busy consumer calendar round out September and will tell us whether Main Street is holding up as well as the AI trade.
Putting It Together
September brings four things together at once: a market at record highs, a seasonal pattern that has historically leaned negative, a Fed decision that’s genuinely up for debate, and an earnings calendar that will tell us whether AI spending is still paying for itself.
None of that is a reason to abandon a constructive stance on stocks. The market’s trend remains higher, and history has generally rewarded staying invested through periods like this one rather than trying to time around them.
I’ll be watching this week’s CPI and PPI most closely. They’re likely to decide whether the Fed’s September meeting is a hold, a hike, or something markets aren’t pricing in yet.
Expect some chop this month — that’s normal for September. I don’t expect it to derail the year.
Thank you for being a subscriber!
President, Kisco Capital
This commentary is provided by Kisco Capital LLC for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Opinions are subject to change without notice. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal. Kisco Capital and its clients may hold positions in securities discussed herein.
