September is a classic hit song by the American band Earth, Wind & Fire. While we don’t recall the lyrics exactly, the song is about remembering love and dancin’ in September. Well, stock market investors certainly didn’t love this past September and were probably not in the mood for any dancin’. Unlike the song, the month of September 2023 is something we’d be happy to forget.
The Dow Jones Industrial Average declined 3.5% last month – the Standard & Poor’s 500 Index lost 4.9% – while the NASDAQ Composite tumbled 5.8%. For the S&P and NASDAQ, it was their worst month of the year. Primary factors driving the monthly declines included rising oil prices (which act as a headwind on the economy), a hawkish tone by the Federal Reserve (tight monetary policy), and rising bond yields (which provide competition to stocks). The yield on the 10-year U.S. Treasury note hit a 16-year high last week of approximately 4.6%. Put it all together, the market has been dealing with some obstacles, and is frequently changing its mind on whether the economy can avoid a recession.
Looking to the week ahead, and putting September in the rearview mirror, financial markets will be focused on some fresh economic data including the ISM’s Manufacturing Purchasing Managers’ Index, the ISM Services PMI, the Job Openings and Labor Turnover Survey (JOLTS), and most importantly, the Jobs Report. Expectations are the U.S. Bureau of Labor Statistics will report the economy added 155,000 jobs last month, with the unemployment rate ticking down a notch to 3.7 percent. Also, market participants will be gearing up for earnings season, which begins next week – kicking off with reports from JPMorgan Chase and other large banks.
For the third quarter of 2023, the estimated year-over-year decline for the Standard & Poor’s 500 Index is -.1 percent, according to data from FactSet Research. Mostly though, given the current environment, investors are already looking ahead to what 2024 earnings may be like, and if things can improve next year. Forward guidance given by companies will be more important than the actual results for last quarter.
As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC