Lost September? | September 1, 2023

AUTHOR: Jason Roque, CFP®, APMA®, AWMA®
TITLE:   Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ, China, Jobs, PCE, FRB

Markets gained for the week but lost for the month. Which indication should hold true as we move into September?

Monday                     S&P 500 0.63% | NASDAQ 0.84%

Markets opened the week on an optimistic tone as there was little in the way of economic data. Efforts by China to stabilize the recent run on equities showed through on the day as investor sentiment seemed upbeat.

Tuesday                       S&P 500 1.45% | NASDAQ 1.74%

JOLT’s job openings came in at 8.82M jobs. This is the lowest level seen since May 2021 (8.28M). The news brings hopes of a Federal Reserve Board (FRB) pause at their next meeting. Large Growth stock stand to gain the most on a pause, as seen by the NASDAQ’s outperformance on the day.

Wednesday                 S&P 500 0.38% | NASDAQ 0.54%

ADP nonfarm payroll additions showed signs of a weakening job market. Additionally, GDP for the second quarter was revised down to 2.1% from 2.4%. The bad news would traditionally lead one to think markets lost on the day. To the contrary, weaker economic conditions increase the likelihood the FRB will pause on rate hikes at their September meeting.

Thursday                     S&P 500 0.16% | NASDAQ 0.11%

Markets were little changed on Thursday. The Personal Consumption Expenditures (PCE) index confirmed the inflationary data the Consumer Price Index told us earlier in the month. Prices rose slightly in July. Given the trend it should be expected that inflation will remain between 2.7% and 3.5% over the next year.

Friday                          S&P 500 0.18% | NASDAQ 0.02%

Happy Jobs Friday! The unemployment rate rose to 3.8% in spite of a nonfarm jobs add of 187K. This happened as a result of an increased participation rate, 62.8%, from 62.6%. This was the highest level since March, 2020 (63.4%). The higher unemployment rate has markets betting that the FRB will not be raising rates later this month.

Conclusion                  S&P 500 2.50% | NASDAQ 3.25%

After a strong June and July, markets closed August with the S&P 500 losing 1.7% and the NASDAQ losing 2.2%. The markets have pushed substantially higher since their lows put in on September 30, 2022. The notion of a pullback at this point is not surprising. The likelihood volatility could continue into September is realistic. As September is a notoriously volatile month for Markets. The Atlanta FRB is currently projecting quarter three GDP at 5.6%! If that holds true corporate earnings season starting October could spur a resurgence into yearend for equities.

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