NEW YORK — September was supposed to be ugly for financial markets.
The prospects of a U.S. attack on Syria and less economic stimulus from the Federal Reserve only added to investor worries going into September, which historically is the worst month of the year for stocks.
Instead, the Dow Jones industrial average is up 3.3 percent so far this month, even after it slipped 26 points, to 15,300.64, on Thursday. The Standard & Poor’s 500 index is up 3.1 percent this month, after falling 6 points Thursday to 1,683.42.
Another way to show how investors’ nerves have calmed is the CBOE Volatility Index, sometimes referred to as “Wall Street’s fear gauge.” When the VIX, as it is better known, moves higher, it means investors expect more volatility in the next 30 days. It is down more than 15 percent this month. Gold, another signal of investor fear, is down more than 5 percent.
September was supposed to be bad, so what happened?
The recent de-escalation of the U.S.-Syria crisis, combined with a calming in the bond market, has provided fuel to lift stocks higher, market strategists and investors said.
While the ultimate fate of a U.S. attack on Syria is unknown, it looks like an immediate missile strike isn’t happening soon.
Syrian President Bashar Assad said Thursday his government has agreed to surrender its chemical weapons in response to a Russian proposal.
“Syria is still there as a concern, but it’s starting to de-escalate,” said Richard Sichel, chief investment officer at Philadelphia Trust Co., which manages $1.9 billion in assets.
While Syria’s economy is too small to have an impact on the global economy, the country is important for oil markets because a conflict there could escalate and jeopardize the flow of crude from the Middle East.
“We’re no longer looking at the worst-case scenario,” said Burt White, chief investment officer with LPL Financial.
