Weekly Market Performance – Goodbye September
U.S. and International Equities
Major U.S. and International Markets Finished lower
The major equity markets finished the week, along with the month of September, lower. The international markets were also not immune to the selloff as the developed international markets, as represented by the MSCI EAFE Index, along with the emerging markets, as represented by the MSCI EM Index, pulled back.
September has been one of the worst performing months for the S&P 500 over the past 10 and 20 years. This year is proving to be no different. Approximately half of S&P 500 Index constituents were off by at least 10% from their respective 52-week highs during the month.
Energy Propels Through a Third Straight Week
On the flipside, energy stocks continued their run higher as market participants continue to bid these names higher over lower-than-expected worldwide energy supplies. Market concerns continue over China not having enough coal and natural gas despite the country’s energy stockpiling as many nations compete for a finite supply. In addition, energy supply concerns in China have some investors worried about future China industrial production, which also dampened investor sentiment for some investments tied to Chinese economy.
Fixed Income and Commodities Recap
Bonds Lower while Oil Propels
The bellwether Bloomberg Barclays Aggregate Bond Index finished lower for the second straight week. Bond price declined and the 10-year Treasury yield ended the week higher; a trend that began two weeks ago.
Oil and Natural Gas finished higher for the second straight week amid worldwide supply concerns. Gold also caught a bid this week as investors took advantage of both weakened metal’s performance this year.
“This week, stocks stumbled as negotiations on fiscal policy and debt ceiling issues began to increase in Washington D.C.,” explained LPL Financial Director of Research Marc Zabicki. “The potential for an overdue asset price correction has left us a bit cautious of late.”
Economic Weekly Roundup
September Global PMI Moderating while Consumer Confidence Declines
The September Global Composite Purchasing Manager’s Index (PMI) data reflected a global economy that is presently solid but is showing some moderating growth. The Eurozone Composite PMI declined to a five-month low, but is above the September US PMI reading. Japan’s reading has stabilized at a weak level, which is reflective of the nation’s fight against COVID-19. Materials and labor shortages were evident in the data releases due to lengthening supplier delivery times and rising backlogs, suggesting elevated inflation globally may be with us longer than anticipated.
The Conference Board’s measure of consumer sentiment declined in September to a seven-month low as concerns about the Delta variant and inflation weighed on confidence. That being said, the percentage of participants who said jobs were plentiful increased to a record high.
Other highlights from this week’s economic calendar included:
Initial claims for unemployment insurance increased more than economists expected to over 360K for the week ending September 25.
Continuing claims came in slightly higher than expectations while showing improvement from the prior week, but the stagnant report shows the impact of the Delta variant on the present labor market.
The following economic data is slated to be released during the week ahead:
Monday: August durable and factory orders
Tuesday: September domestic auto sales, Markit PMI and Institute Supply Management non-manufacturing report, August trade balance
Wednesday: September ADP employment survey
Thursday: Weekly initial and continuing unemployment claims, August consumer credit
Friday: September hourly earnings, workweek, manufacturing, nonfarm and private payrolls, September employment report, and August wholesale inventories
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