Weekly Market Commentary: September 24-30, 2023
September is a Sour Month for Markets
The month of September is historically a rough month for markets — and this year was no exception. Rising gas prices and high mortgage rates weighed on markets throughout the month. Then the prospect of a potential government shutdown pulled stocks down even further last week.
Congress put us in a precarious position once again, taking it down to the wire before reaching a last-minute agreement and narrowly avoiding a government shutdown. The agreement is a temporary bandage, keeping the government open only for six weeks. The current package includes aid for natural disasters and money for keeping the Federal Aviation Administration (FAA) going but doesn’t include financial support for border security or Ukraine. In response, the S&P 500 pulled back for the fourth consecutive week, while the yield on the 10-year U.S. Treasury note crested 4.6%.
The third reading of second-quarter gross domestic product (GDP) showed growth of 2.1% from April to June, consistent with previous readings. It’s still just a hair below the first-quarter growth of 2.2%, and the BEA said the second-quarter drop “reflected a downward revision to consumer spending that was partly offset by upward revisions to nonresidential fixed investment, exports, and inventory investment.”
Consumers, who have buoyed the economy over the past couple years, are showing other signs of fatigue. U.S. consumer confidence slipped to 103.0 in September, falling short of expectations and down from August’s reading of 108.7. The percentage of respondents who said they thought a recession was likely also ticked up after falling the previous month.
So what lies in store as we wave goodbye (and good riddance!) to September and say hello to a new month and a new quarter? Hard to tell. Politics will continue to confound market growth; the 2024 election cycle is heating up and a potential challenge to Rep. Kevin McCarthy’s position as House Speaker is percolating. But while the month of October has a reputation as being a volatile one for markets, since 2003 the S&P 500 has posted gains 65% of the time. Hopefully that positive trend will hold over the next few weeks.
Coming this week
We’ll get a good look at the job market this week. The ADP employment report will be released on Wednesday and is currently forecasted to drop from 177,000 last month to 150,000. The nonfarm payrolls report on Friday is also expected to be lower, going from last month’s reading of 187,000 to 170,000. We’ll also see the September unemployment rate and hourly wage changes at the end of the week.
Other data this week includes manufacturing and construction spending (Monday), factory orders (Wednesday) and trade deficit (Thursday).
Consumer debt — particularly in the form of credit cards — has risen steadily all year. The latest numbers will be released on Friday and are expected to take a big jump from $10.4 billion to $11.7 billion.
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