The Monthly Market Wrap provides an insightful analysis of treasury yields, fixed income performance, mega-cap stocks, and key economic indicators in September 2024. It also delves into housing market data and the performance of commodities.
Key Stock Market Index Performance
Stocks fell in the first week of September but gained strength leading up to and following the FOMC meeting on September 18th.
The S&P 500 rose 2.1%, the Dow Jones Industrial Average advanced 2%, and the Nasdaq Composite added 2.8%. Emerging Markets was a big beneficiary of monetary policy easing, jumping 6.7%.
Eight of eleven sectors finished September in the black. Consumer discretionary and utilities led the way with respective gains of 7.3% and 6.6%, followed by communication services at 3.8%. Financials, health care, and energy were the three sectors that went negative in September. Tumbling oil prices pushed the energy sector 3% lower in September and into the last-place spot among all sectors.
Economic Data
Employment
The unemployment rate dipped to 4.2% in August, ending a streak of four straight monthly increases.
The decrease from 4.3% to 4.2% comes one month after the “Sahm Rule,” an economic rule of thumb serving as early warning of a possible recession, was triggered. The labor force participation rate remained unchanged at 62.7%. Nonfarm payroll data revealed 142,000 jobs were added in August, below the expected 161,000 but up from July’s revised figure of 89,000, which marked the lowest positive job gain for a month since May 2019.
Inflation vs. Fed Funds Rate
The US inflation ticked lower for the fifth straight month, down to 2.53% in August; core inflation inched slightly higher to 3.20%, marking just the 2nd month out of the last 17 in which core inflation increased. Looking at the shorter-term month-over-month changes, the US Consumer Price Index rose 0.19%, and US Personal Spending increased by a quarter percent.
The Federal Reserve lowered its key Fed Funds Rate by 50 basis points at the September 18th FOMC meeting, bringing the key benchmark rate down from 5.50% to 5.00%. This was the first rate cut since March 2020, and comes after eight consecutive meetings in which the Fed maintained the Fed Funds Rate at 5.50%.
Related: Interest Rates Demystified: From Federal Funds to Your Finances
Housing Prices and Mortgage Rates
US New Single-Family Home Sales contracted by 4.7% MoM, and Existing Home Sales dipped 2.5% MoM. The Median Sales Price of Existing Homes fell for a second consecutive month, by 1.1% MoM to $416,700 at the end of August.
Mortgage rates fell further as expectations of a September rate cut became a reality at the September 18th FOMC meeting; the 15-year Mortgage Rate fell by 35 basis points to 5.16% while the 30-year shed 27 bps to 6.08%, both as of September 26th.
Crude Oil Prices Slump
Crude oil prices dipped in September; the price of WTI reached a YTD low of $66.73 per barrel before settling at $71.33 on September 23rd, a decline of 4.3% for the month. Brent also set a YTD low in September before rebounding in the back half of the month to $74.95 as of September 23rd. Lower oil prices translated into lower gas prices, with the average price of gas falling by 11 cents in the month to $3.30 per gallon as of September 30th.
Gold Price Strikes Another New High
The price of Gold surged 5.9% in September and set another new all-time high after breaking through $2,500 in August, ending the month at $2,661.90 per ounce.
Related: Gold Just Had It’s Best Quarter Since 2020
Fixed Income
Treasury yields fell across the curve with shorter-term durations posting larger declines. The 1-month, 3-month, and 6-month T-Bills all fell around 50 basis points, reflecting the Fed’s half a percentage point rate cut. Declines were less steep further down the curve; the 10-year fell a tenth of a percentage point, and the 30-year dipped six basis points.
Bond funds benefitted from the Fed’s actions and declining yields. The iShares 20+ Year Treasury Bond ETF (TLT) and iShares iBoxx Investment Grade Corporate Bond ETF (LQD) both rose over 1.9%, and the Core US Aggregate Bond ETF (AGG) advanced 1.3%.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.