U.S. equity markets pared back early gains to finish in the red on Friday, as a stronger-than-expected jobs report raised expectations of tightening by the Federal Reserve (more below). The Dow and S&P 500 shed 1.1%, while the Nasdaq declined 1.3%. For the week, the Dow and S&P 500 fell roughly 3%, while the Nasdaq contracted 4%.

It was a broad-based retreat, with losses across most sectors except for energy. Shares of energy companies led gains as oil prices rose. Shares of Hess Corp. (HES), Mosaic Co. (MOS), Halliburton (HAL), and Schlumberger (SLB) rose over 3%, ranking among the top five gainers in the S&P 500. Shares of Broadcom (AVGO) climbed 1.7% after the semiconductor company announced stronger-than-expected revenue and earnings for its fiscal third quarter. Shares had risen 5% early in the session before retreating.

Crude oil prices rose slightly, as leaders from G-7 countries prepare to impose a price cap on purchases of Russian crude. The price of West Texas Intermediate (WTI) crude is trading nearly 1% higher at $87 per barrel.

Prices of major cryptocurrencies reversed course and declined. The price of Bitcoin fell 0.9%, falling back below $20,000. The price of Ether dropped more than 1%, below $1,600.

1/ QUICK HITS

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2/ THE BIG STORY

Will There be a September Effect?

September has a reputation for being the worst month of the year for the stock market. Looking back, historical returns indicate it’s one that’s earned. 

Historically, September has been the weakest month for the S&P 500, with an average decline of 0.5% since 1950. The Dow Jones Industrial Average (DJIA) has averaged a 0.8% September decline over the same period.

Some analysts believe the September effect could be tied to seasonal behavioral bias, as investors change portfolios at the end of summer to cash in. Another reason could be that most mutual funds cash in their holdings to harvest tax losses. However, like other seasonal effects such as the October effect, the September effect is still widely considered a market anomaly. 

The September effect doesn’t necessarily mean investors can expect losses this month. While looking at historical returns can provide useful clues about what could happen, past performance isn’t always a guarantee of future results.

3/ TODAY IN HISTORY

September 3, 1929

Icon Communications / Contributor / Getty Images

On this day in 1929, the Dow Jones Industrial Average (DJIA) swelled to a record high of 381.17. At the time, economist Irving Fisher predicted, “Stock prices have reached what looks like a permanently high plateau.” 

That statement would go on to become one of Fisher's most frequently quoted—as one of the worst market predictions of all time. The bubble would burst later that year in a series of crashes beginning with Black Thursday, when the DJIA plunged 11% at the open.

Fisher went on to develop a new theory about what triggered the crash: credit policies that encouraged Americans to take on too much debt. His debt-deflation theory would gain traction years after his death, when Harvard economist Milton Friedman pronounced him “the greatest economist the United States has ever produced.” And it found its way into the spotlight again, when overgenerous credit lines and huge debts prompted another U.S. market crash in 2008.

Source: Time