September 27, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. After two weeks of robust stock market gains, the S&P 500 managed to achieve a modest return of 0.62%, while still concluding its third consecutive week of positive performance. The consumer price index in the United States experienced an increase of 3.4% for the year ending in April, a slight decrease from the 3.5% recorded in March, aligning with market expectations. In April specifically, prices rose by 0.3%, a deceleration compared to the 0.4% increase observed in March. Additionally, core inflation in the United States also showed signs of easing last month. In a separate report, data revealed that the eurozone economy expanded by 0.3% during the first quarter of the year. Furthermore, the Conference Board Consumer Confidence Index® decreased in September to 98.7, down from a revised figure of 105.6 in August. The Present Situation Index, which reflects consumers' evaluations of current business and labor market conditions, fell by 10.3 points to 124.3. Meanwhile, the Expectations Index, which gauges consumers' short-term outlook regarding income, business, and labor market conditions, dropped by 4.6 points to 81.7, although it remained above the critical threshold of 80; a reading below this level typically indicates a potential recession.
September 20, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. All major U.S. equity indices experienced significant gains over the week, following a Federal Reserve rate cut that exceeded expectations. The S&P 500 increased by 76.53 points, representing a rise of 1.4%. The Dow Jones Industrial Average rose by 669.58 points, or 1.6%. The Nasdaq Composite gained 264.34 points, equivalent to an increase of 1.5%. The Federal Open Market Committee (FOMC) decided to lower interest rates by 50 basis points, bringing the federal funds rate range down to 4.75-5.00%. In a press conference following the announcement, Fed Chair Jerome Powell expressed satisfaction with the decision, stating, "We made a good strong start and I am very pleased that we did," while also indicating a growing confidence that the nation had overcome its struggle with high inflation. Fed officials forecast that the benchmark interest rate will decrease by an additional 50 basis points by the end of this year, a full percentage point in the following year, and another half percentage point in 2026.
September 13, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Over the course of the week, the S&P 500 experienced an increase of 4%, while the Nasdaq Composite saw a rise of 5.9%, marking the most successful week of the year for both indices. The Dow Jones Industrial Average also made progress, advancing by 2.6% during the same period. Economic indicators suggesting a slowdown in inflation appear to bolster the argument for a potential interest rate reduction, with recent developments now introducing the possibility of a more substantial 0.5% cut by the Federal Reserve. The consumer price index for August registered an annualized rate of 2.5%, the lowest since February 2021. Additionally, wholesale prices increased by 0.2% in August, aligning with market expectations.
September 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and the Nasdaq Composite fell by 1.7% and 2.6%, respectively, as technology stocks suffered significant losses, while the Dow Jones Industrial Average decreased by 1%. The S&P 500 has now recorded four consecutive days of losses, resulting in its largest weekly decline since March 2023, a pattern that was similarly observed in the Dow. Since 1950, the S&P 500 Index and the Dow Jones Industrial Average have experienced their most significant percentage declines during the month of September. Over the past decade, bonds have decreased in value in eight out of ten Septembers, and gold has seen a decline every September since 2017. The S&P 500 has recorded losses in each of the last four Septembers, and this year, the non-farm payrolls data may have increased importance for U.S. equities. This week, investors observed a phenomenon that has not occurred since the summer of 2022: a positively sloped yield curve. In particular, the yield on the 10-year U.S. Treasury note surpassed that of the 2-year notes by a small margin. US manufacturing activity contracts for a fifth straight month. The ISM manufacturing purchasing managers' index (PMI) came in at 47.2% in August – up 0.4 percentage points from 46.8% in July.
