Monthly Market Update – September 2024

By Simmons Investment Advisors on October 1, 2024

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Headlines From Last Month:

• In what historically is the worst month of the year, US stocks finished September higher, but only after continued volatility.  
  • Equities suffered their biggest weekly sell-off in 18 months to start September, on concerns over slowing economic growth and a cooling labor market. 
  • The following week, ahead of the Federal Reserve’s meeting, stocks rallied back with their best week of the year.  Markets remain cautiously optimistic on hopes that rate cuts will help avoid a downturn.
  • US stocks continued to move higher at the end of the month on overseas equity strength.
• The Chinese Central Bank lowered interest rates and injected liquidity into its banking system.  This stimulus led China stocks to their best week since 2008 and spurred global equity buying.  China’s benchmark index (CSI 300) rallied 25% over a 5-day period.
• Federal Reserve:
  • On September 18^th, the Fed cut interest rates by 50 basis points, setting its benchmark rate between 4.75% and 5.00%. 
  • This was the first cut in over 4 years – they raised rates for 11 consecutive meetings during 2022-2023 as they fought to bring down inflations.
  • Chairman Powell described the cut as a “recalibration” needed to keep the labor market and economy in a solid condition.
• US Presidential election – Kamala Harris and Donald Trump faced off in their first (and maybe only) debate on September 11^th.
• The price of Oil continued to move erratically in September on geopolitical developments, dropping -7.31% for the month, now down -4.43% in 2024, and down -27.23% from the September ‘23 high.  Gas prices hit a six-month low (around $3.22 a gallon).
• Gold prices added another 5.65% last month, up 27.16% for the year and 41.60% since the Oct 5^th, 2023, low.  The gains continue to be attributable to geopolitical concerns, stock volatility, and hopes of further rate cuts.  Gold closed September 26^th at an all-time high of $2,670 per ounce.
• Mortgage Rates fell to their lowest level (6.05% on a 30-year fixed mortgage) since April 2023 as interest rates have pulled back.
• Sports:
  • Americans came up short at the US Open tennis tournament, with Jessica Pegula losing in the women’s final and Taylor Fritz losing in the men’s final – both in straight sets.  Aryna Sabalenka (2^nd seed) from Belarus and Jannik Sinner (1^st seed) from Italy were the respective winners, each earning $3.6 million with their victories.
  • NFL games kicked off on September 5^th, as the defending champions, the Kansas City Chiefs beating the Baltimore Ravens 27-20.  Oh, and the Patriots upset the Bengals in week 1 (but followed that up with 3 straight losses).
  • MLB enters the post-season, with Wild Card matchups starting today (October 1^st).  This follows the passing of Pete Rose, at the age of 83.
• Economic Data:
  • Employment/Unemployment:
    • US Nonfarm Payrolls increased by 142K in August, below the expected 160K.  July’s numbers were revised down from 114K to 89K, the smallest gain since December 2020.
    • Unemployment declined from 4.3% to 4.2% last month, having increased from 4.1% to 4.3% in July.
  • Retail Sales:
    • Rose 0.1% in August, versus the expected decline of -0.2% ⁽ⁱ⁾.
  • Inflation:
    • Consumer Price Index:
      • CPI rose 0.2% (in-line with estimates) from last month, increasing 2.5% (slightly below the expected increase of 2.6%) from a year ago ⁽ⁱ⁾.  This was the smallest 12-month increase since February 2021.
      • Core CPI (excludes food and energy) rose 0.3% (higher than the expected 0.2%) in August, and 3.2% year-over-year (as anticipated) ⁽ⁱ⁾.
    • Producer Price Index:
      • PPI increased 0.2% in August, in-line with estimates.  On a 12-month basis, it rose 1.7%, compared to 2.7% in June and 2.2% in July ⁽ⁱ⁾.
      • Core PPI (excludes food and energy) increased 0.3%, compared to estimates for a rise of 0.2%.  From a year ago, it increased 3.3% ⁽ⁱ⁾.
    • Personal-Consumption ExpendituresIndex:
      • PCE rose 0.1% last month (as anticipated) and 2.2% from a year ago (vs the expected 2.3) ⁽ⁱ⁾.
      • Core PCE (excludes food and energy) rose 0.1% (vs the expected 0.2%) in August and 2.7% (as estimated) from a year ago ⁽ⁱ⁾.
    • Personal Spending rose 0.2% last month, below the expected 0.3% ⁽ⁱ⁾.
    • Personal Income increased 0.2%, below the expected 0.4% ⁽ⁱ⁾.

US Equities:

• The S&P 500 finished September at an all-time high, with the index’s best year-to-date performance thru the first 3 quarters of the year since 1997.  The Dow peaked on September 27^th and the Nasdaq is about 2.4% off its July high.
• Sector performance:
  • The Consumer Discretionary sector was the best performing sector last month, up 7.02%, followed by Utilities (6.43%), Communication Services (4.53%), and Industrials (3.27%) ^(vii). 
  • On the downside, Energy lost -2.79%, Healthcare fell -1.82%, and Financials slipped -0.67% ^(vii).
  • Year-to-date, every sector is higher, led by Information Technology (29.63%), Communication Services (27.88%), Utilities (27.45%), and Financials (20.40%).  The biggest laggard is Energy, up only 5.69% ^(vii).
• Growth vs. Value:
  • Growth (Russell 1000 Growth Index) rose 0.69% while Value (Russell 1000 Value Index) gained 1.21%.
  • For the year, Growth is up 23.90% and Value is up 14.79%.
• Small-cap stocks (Russell 2000 Index) rose 0.56% last month, up 10.01% in ‘24. 

• Monthly performance, calculated on a price return basis:
  • Dow rose 1.85%
  • S&P 500 gained 2.02%
  • Nasdaq was up 2.68%
• Year-to-date performance, calculated on a price return basis:
  • Dow is up 12.31%
  • S&P 500 is up 20.81%
  • Nasdaq is up 21.17%

US Fixed Income – bonds yields continued to decline, especially on the shorter-end with the Fed lowering the Federal Funds Rate by 50 basis points:

• Yields on US Treasuries at the end of September:
  • 1 year – 3.99% ^(iv)
  • 2 year – 3.62% ^(iv)
  • 10 year – 3.74% ^(iv)
• As a point of reference, at August month-end, yields were at:
  • 1 year – 4.39% ^(iv)
  • 2 year – 3.91% ^(iv)
  • 10 year – 3.90% ^(iv)

Regards,

Mike & Steve

DISCLOSURE: All data is as of previous month-end (September 30^th, 2024).  Sources include www.cnbc.com (i), https://www.cnn.com/business (ii), https://finance.yahoo.com (iii), other public websites, Hightower Advisors, LLC (iv), FactSet (v), Barron’s (vi) and www.spglobal.com (vii).