September is typically the worst month of the year for stocks. As I noted three weeks ago, since 1896 the Dow Jones Industrial Average (INDEX: ^DJI) has posted an average loss of 1% during the first month of fall, and if you take only the past dozen years into consideration, that loss widens to 2.1%.
Yet this September couldn't have been more different. The Dow is up 3.0%, the S&P 500 rose 2.9%, the Nasdaq is plus 2.3%, and the Russell 2000 gained 3.9%. As a recent CNBC article asked: "What Happened to the 'Worst Month of the Year'?"
Central banks happened
Since the beginning of the month, monetary policymakers around the world have been on a veritable money printing frenzy -- leading some politicians and commentators to pronounce a currency war.
The European Central Bank started things off with an unlimited bond-buying program designed to reduce borrowing costs for countries like Spain and Italy. The U.S. Federal Reserve then initiated a third round of quantitative easing under which it will buy $40 billion of mortgage-backed securities a month until the economy shows signs of recovery. The central bank of Japan joined by increasing the size of its ongoing stimulus measures by $126 billion. And finally, at the end of last week, the Chinese Central Bank acknowledged that it had injected $58 billion into its financial system to alleviate interest rates.
As far as money creation goes, it was an absolutely epic month.
2 Stocks left behind
Despite these measures and the otherwise stellar performance of equities, a handful of Dow stocks were nevertheless left behind in the final week of the month.
The worst-performing stock on the index last week was the heavy machinery manufacturer Caterpillar (NYSE: CAT), which saw its stock decline by 6.2%. The impetus for the fall was the company's updated earnings guidance. While Caterpillar originally expected to earn between $15 and $20 a share in 2015, it now expects to earn only $12 to $18.
Speaking at a recent mining expo, its chief executive officer Doug Oberhelman noted:
There are a number of geopolitical and economic factors driving uncertainty in the world today, but our base case scenario calls for modest global economic growth over the next few years. We think this is a reasonable view and the most likely outcome, and based on that, we expect 2015 sales and revenues for Caterpillar to be in a range of $80 to $100 billion, and for profit in a range of $12 to $18 per share.
The runner-up in terms of poor performance last week was Microsoft (Nasdaq: MSFT), which returned a negative 4.6% over the five trading days.
In a move reminiscent of Mitt Romney's comment about the other "47%," Intel (Nasdaq: INTC) CEO Paul Otellini was recently "overheard" at a private company gathering telling Intel employees that Microsoft's upcoming Windows 8 isn't ready, and won't be, even after its release to the general public. The rumor sent shockwaves through the market, sending Microsoft's shares tumbling on Wednesday.
As comments like these often are, however, it seems they may have been taken out of context. As my colleague Tim Brugger explained, after making the comment, "The Intel CEO went on to say that releasing Windows 8 now is the right move." According to Brugger: "Microsoft can work out the itty-bitty bugs after it ships … and there's certainly precedent for that. Who hasn't downloaded a patch, update, or some variation thereof, after launching a new system or software?"
Needless to say, the proof will ultimately be in the pudding.
Foolish bottom line
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