Each year, September rolls around, and it tends to be the worst month for stocks. Historical data show that September is the worst-performing month for the stock market. Since 1928, the S&P 500 has averaged a negative return of about 0.7% to 1% in September, making it the weakest month of the year. Institutional investors and large funds often sell off stocks near the end of the third quarter to lock in gains or adjust asset allocations. Some fund managers take advantage of improved liquidity after the summer months to tax-harvest portfolios by selling losers. In addition, traders return from vacations to reevaluate portfolios and often move to more defensive risk-off strategies.
The technical team at J.P. Morgan sees a storm brewing and published reports had this to say:
JPMorgan warns that the S&P 500 faces downside risks heading into an autumn selloff. Technical strategist Jason Hunter highlights deteriorating market internals, a lack of conviction in tech/AI leadership rotations, rising Treasury yields, and defensive shifts as signals of late-summer and early-fall weakness. Mr. Hunter highlighted a growing divergence between AI hardware/chip makers and heavy AI capital expenditure spenders, noting it mirrors the market behavior seen right before the 1999–2000 tech crash.
The J.P. Morgan team is positive on five defensive sectors that growth and income investors concerned about a major sell-off should consider. All still offer growth potential, but are far less volatile than the technology and AI/data center sectors. These are the five sectors; we have selected one stock from each that J.P. Morgan analysts have rated Overweight.
Utilities & Energy Infrastructure: GE Vernova
The J.P. Morgan team is bullish on this company, which has been designated as one of the firm’s highest-conviction ideas for structural power demand and electrification infrastructure, with a tiny 0.17% dividend. GE Vernova (NYSE:GEV | GEV Price Prediction) operates in the electric power industry, providing products and services that generate, transfer, orchestrate, convert, and store electricity. It designs, manufactures, delivers, and services technologies to create a sustainable electric power system, enabling electrification and decarbonization.
GE Vernova operates four segments:
- The Power segment includes the design, manufacture, and servicing of gas, nuclear, hydro, and steam technologies, providing a critical foundation of dispatchable, flexible, stable, and reliable power.
- The Wind segment includes wind generation technologies, including onshore and offshore wind turbines and blades.
- The Electrification segment includes grid solutions, power conversion and storage, and electrification software technologies required for the transmission, distribution, conversion, storage, and orchestration of electricity from point of generation to point of consumption.
- The Accelerator business includes advanced research, consulting services, and financial services.
The J.P. Morgan price target for the shares is $1,330.
Financials: Citigroup
Rising interest rates and a reasonable valuation make this a great stock to own now. It has a 1.74% dividend. Citigroup (NYSE:C) is a global diversified financial services holding company.
The company’s segments include:
- Services
- Markets
- Banking
- Wealth
- U.S. Consumer Cards
The Services segment includes Treasury and Trade Solutions (TTS) and Securities Services. TTS provides an integrated suite of cash management, trade and working capital solutions to multinational corporations, financial institutions and public sector organizations.
The Markets segment provides corporate, institutional and public sector clients with sales and trading services across equities, foreign exchange, rates, spread products and commodities. The Banking segment includes investment banking, which supports client capital-raising needs, while the Wealth segment includes Private Bank, Wealth at Work and Citigold.
The U.S. Consumer Cards segment includes branded cards, co-branded cards, private label cards and installment lending solutions.
The J.P. Morgan price target for the bank is $149.
Value-Oriented Consumer Goods: Walmart
The stock was blasted recently after posting solid results, but it also issued guidance for lower-than-expected U.S. same-store sales growth. Walmart (NYSE:WMT) is a technology-powered omnichannel retailer that pays a 0.83% dividend.
Walmart operates retail and wholesale stores and clubs, as well as e-commerce websites and mobile applications, throughout the United States, Africa, Canada, Central America, Chile, China, India, and Mexico.
It operates in three reportable segments. The Walmart U.S. segment includes the company’s mass merchandising concept in the U.S., as well as eCommerce, which provides omni-channel initiatives and other specific business offerings such as advertising services. The Walmart International segment consists of the company’s operations outside of the U.S. through its subsidiaries, as well as eCommerce and omni-channel initiatives. And the Sam’s Club U.S. segment includes the warehouse membership clubs in the U.S., as well as samsclub.com and omni-channel initiatives.
J.P. Morgan has a $125 target price.
Healthcare and Pharmaceuticals: Bristol-Myers Squibb
Bristol Myers Squibb (NYSE:BMY) is a global biopharmaceutical company committed to discovering, developing, and delivering innovative medicines for patients with serious diseases across oncology, hematology, immunology, cardiovascular disease, neuroscience, and other therapeutic areas. This top company remains a solid long-term pharmaceutical stock, offering an outstanding entry point with a reliable 3.83% dividend.
Its platforms comprise chemically synthesized or small-molecule drugs, including protein degraders, as well as biologics produced through biological processes. These platforms also encompass ADCs, CAR-T cell therapies, and radiopharmaceutical therapeutics. Small-molecule drugs are typically administered orally as tablets or capsules, although other delivery mechanisms are also used. Biologics are usually administered by injection or intravenous infusion. CAR-T cell therapies are administered by intravenous infusion.
Its growth portfolio includes:
- Opdivo
- Opdivo Qvantig
- Orencia
- Yervoy
- Reblozyl
- Opdualag
Bristol Myers Squibb’s legacy portfolio includes:
- Eliquis
- Revlimid
- Pomalyst/Imnovid
- Sprycel
- Abraxane
J.P. Morgan recently raised its $67 target for the stock to $73.
Industrials: Caterpillar
The giant equipment company has had a banner 2026 and is walloping the S&P 500, up 36.46% year-to-date, while paying a small 0.70% dividend. Caterpillar (NYSE:CAT) manufactures construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Its segments include:
- Construction Industries
- Resource Industries
- Power & Energy
The Construction Industries segment supports customers using machinery in infrastructure and building construction applications. The Resource Industries segment develops and manufactures high-productivity equipment for surface and underground mining operations worldwide, and provides select work tools, machinery components, wear and maintenance components, and related parts. And the Power & Energy segment supports customers in oil and gas, power generation, marine, rail and industrial applications, including Caterpillar machines. It also develops and provides software solutions for the mining industry.
Caterpillar also provides financing and related services through its Financial Products segment.
J.P. Morgan has a $1,165 target price.
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