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Another September slide?

NEW YORK NY - AUGUST 31:  Traders work floor New York Stock Exchange August 31 2012 New York City.

NEW YORK, NY - AUGUST 31: Traders work on the floor of the New York Stock Exchange on August 31, 2012 in New York City. Stocks rose after Ben Bernanke, chairman of the Federal Reserve, spoke this morning, announcing that federal policy would "provide additional policy accommodation as needed" in an attempt to spur the slow economy. (Photo by Andrew Burton/Getty Images)

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Updated: October 5, 2012 6:20AM

NEW YORK — The 10 percent summer rally gave off good vibrations on Wall Street. But summer is over. The big question now is whether traders heading back to work can keep the bullish vibe alive in September, historically the worst month for stocks.

It won’t take long for investors to find out. A host of potential market-moving events are on tap this month that could either upend the current rally or unleash a new up leg. In what amounts to an understatement, James Camp, director of fixed income at Eagle Asset Management, said: “There is a significant ‘news calendar’ in September.”

Stocks are coming off a 1.98 percent gain in August, sparked by hopes the Federal Reserve will deliver a new round of stimulus to the economy if needed, a thesis confirmed in large part during Fed Chairman Ben Bernanke’s speech on Friday.

Here are the big headlines that could move markets in September — which is ranked 12th, or dead last, in monthly performance over the past 50 and 100 years, falling roughly 0.9 percent on average, Bespoke Investment Group says.

ECB policy meeting — On Thursday, the European Central Bank will meet to discuss ways to promote growth in the eurozone. Investors will be watching to see if ECB President Mario Draghi is close to a bond-buying plan similar to the Fed’s quantitative easing (QE) program in an effort to bring down borrowing costs of European governments.

“There are two potential outcomes: Either he starts the bond buying or he waits for an official bailout request,” notes Andrew Busch, a public policy strategist at BMO Capital Markets.

“If he starts, the markets will react positively. If he waits, the markets will react negatively.”

U.S. August jobs report — The number of non-farm jobs created last month is key for two reasons. Friday’s report will provide a fresh read on the economy. It will also influence the Fed’s thinking on whether to launch QE3, as the central bank wants to bring down the jobless rate, now at 8.3 percent. In July a better-than-expected 163,000 jobs were added. A gain of 130,000 is expected in August.

“Barring a big miss on the payroll report, I don’t see QE3 happening,” says Michael Dueker, chief economist at Russell Investments.

Fed’s next rate meeting — Fed stimulus has been a key market driver. Whether the Fed delivers or delays QE3 at its Sept. 12-13 meeting could determine stocks’ next move. One upbeat note: Bespoke says September has been up six of the past eight years and gained 0.12 percent on average since 1928 when stocks are up through August. The S&P 500 index is up 11.9 percent in 2012.

Gannett News Service

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