I can’t be the only person annoyed by the return this week of pumpkin spice latte to the menus of the big coffee chains. Not only do I find pumpkin spice latte disgusting, but the relentless promotion of this caloric concoction represents how retailers always rush seasonal transitions. As if life weren’t short enough.

Does the return of all things pumpkin, and the approach of autumn, presage a stock market downturn? I’m still clinging to summer…and to expectations that the summer stock market rally still has momentum.

The traditional end of summer, Labor Day, looms ahead. Historically, September and October are months in which the stock market performs poorly.

The sizzling summer rally has cooled in recent days. A major catalyst for the pullback in equities was Federal Reserve Chair Jerome Powell’s hawkish speech last week, which also threw fuel on the rise of yields and the U.S. dollar.

Watch This Video: Powell Reminds Wall Street: Don’t Fight The Fed!

The greenback hovers at a 20-year high against other major currencies, and the 10-year Treasury yield has climbed past 3.2%. Wall Street’s hopes for more dovish monetary policy now appear Pollyannish.

That said, positive reports about the U.S. economy continue to juice the equity markets. Economic activity in the manufacturing sector expanded in August, with the overall economy achieving a 27th consecutive month of growth, according to the latest Manufacturing ISM Report On Business. Released on Thursday, the August Manufacturing PMI posted a reading of 52.8%, the same as in July (see chart).

The New Orders Index registered 51.3%, versus the 48% recorded in July. The ISM report states: “The U.S. manufacturing sector continues expanding at rates similar to the prior two months. New order rates returned to expansion levels, supplier deliveries remain at appropriate tension levels and prices softened again, reflecting movement toward supply/demand balance.”

In further good news, the Bureau of Labor Statistics (BLS) reported Friday that total nonfarm payroll employment increased by 315,000 in August, although the unemployment rate rose to 3.7%. Consensus expectations had called for job growth to slow to 300,000 from 528,000 in July and the unemployment rate to hold firm at 3.5%. The BLS also reported that the labor force participation rate increased by 0.3 percentage point over the month to 62.4%.

Average hourly earnings rose by 0.6% from July to August, more than the 0.3% that economists had forecast. Over the past year, wages were up 4.3%, exceeding the expected 3.9%.

The return of Goldilocks…

In my view, the latest economic data indicate what could be called a “growth recession.” We just might be closing in on the holy grail of a soft landing.

That’s the sort of Goldilocks situation preferred by Wall Street. It shows that the economy is growing, but not to the extent that it would trigger an ultra-hawkish response from the central bank.

After the opening bell Friday, the major U.S. stock market indices were trading higher, as investors found a lot to like in the latest manufacturing and jobs data. Summer, and the summer rally, aren’t dead yet.

That said, concerns about global growth bring the hint of an autumn chill. China on Thursday imposed a strict COVID lockdown on the urban manufacturing hub of Chengdu, which is home to 21 million people and represents around 1.7% of Chinese gross domestic product. To get your mind around the magnitude of this lockdown, consider the fact that New York City’s population is 8.3 million.

At the same time, much of the European Union is slipping into recession. Western sanctions against Russia are disrupting the EU’s energy equation, making life difficult for citizens and businesses.

For U.S stocks, volatility typically increases in September and October, particularly in election years. The political stakes are high for the November midterms. President Biden’s anti-MAGA speech Thursday night showed that polarization in America remains fierce. But once a fall election is over, history also shows that equities tend to rebound in the following months.

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John Persinos is the editorial director of Investing Daily.

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