Historically, the autumn months have not been kind to investors in shares with September and October historically weak relative to other periods of the year.

The two months have also registered some of the worst declines in history including the stock market crash of 1987.

We are not suggesting a repeat is on the cards for 2023 but it is noteworthy that the benchmark S&P 500 index had its worst week since the mini-banking crisis in March in the week ended 22 September.

The index fell four straight days to cap a 3% weekly loss while the technology focused Nasdaq dropped 3.6% and the Dow Jones Industrials average fell 2%.

A hawkish Federal Reserve meeting (20 September) certainly didn’t help stock market sentiment as US bond yields continued to hit multi-year highs and the US dollar touched six-month highs as the central bank said interest rates would remain higher for longer.

Also weighing on stocks is the impact of falling inflation on real yields. That is, the rate of interest after accounting for inflation.

If the Fed holds rates steady while inflation falls back towards its 2% target, the real yield increases. On Friday (22 September) the real yield moved up through 2% which some commentators believe represents a very ‘restrictive’ policy stance.

Another worry for investors is the looming government shutdown if a budgetary compromise cannot be reached before the 1 October deadline when current federal funding ends.

A shutdown would force up to 900,000 government workers to stay at home and cause disruption to the economy. Republican house speaker Kevin McCarthy has suggested a 45-day extension of government funding to allow more time for reaching agreement on spending cuts.

At the weekend US president Joe Biden warned closing government would jeopardise military pay, food safety and education programmes.

One market-related repercussion of a closed government is that important economic data releases will be postponed such as non-farm payrolls which are due on 6 October.

In other words, it could add further uncertainty for markets. Lastly, the ongoing UAW (Union of Auto Workers) strike took a turn for the worse on Monday (25 September) after thousands more workers joined the picket lines.

A yawning gap between the demands of the unions and the three auto makers, Ford Motor (F:NYSE), Stellantis (STLA:NYSE) and General Motors (GM:NYSE) suggests the strikes could persist for weeks.

Investors are concerned about the impact on auto supply chains which could see rising pressure on new car prices while lost production might mitigate the inflationary impact as it dampens economic output.

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