Weekly Market Insights – Monday, September 16, 2024

Stocks Bounce Back Ahead of Fed’s September Meeting:

Markets rallied last week as investors reacted positively to better-than-expected consumer and producer inflation data. This suggested that inflationary pressures may be easing, leading to renewed optimism as investors eagerly await the Fed’s next rate decision.
The Dow Jones Industrial Average rose 2.60%, while the S&P 500 Index gained 4.02%. The Nasdaq Composite led, picking up 5.95% as tech stocks rebounded. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.01%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 8/1/24 = 0)

A Wednesday to Remember

Stocks fluctuated out of the gate to start the week as “risk on” investors made moves before the pending release of the twin inflation reports–the Consumer Price Index (CPI) and Producer Price Index (PPI). The three major averages finished slightly more than 1% higher in Monday trading.3
On Wednesday, stocks initially dipped following the release of the CPI as traders appeared disappointed by the report. By midday, that sentiment changed. The S&P 500, down as much as 1.6% in early trading, gained 1.1% by the closing bell. More inflation data out Thursday showed wholesale price increases were tempered, which helped stocks move higher through the balance of the week.4,5

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

Small Caps Shine

Small-cap stocks, as measured by the Russell 2000 Index, have pushed higher in recent weeks, which is a telling move for some Wall Street observers. The Russell 2000 has outperformed the S&P 500 by more than 4% during Q3 so far.6
One reason is that smaller stocks tend to respond when they anticipate interest rates will trend lower. Investors appear to be positioning themselves in small cap issues, expecting the Fed may adjust rates at its September meeting as it attempts to guide the economy to a soft landing.7

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management

Footnotes and Sources

1The Wall Street Journal, September 13, 2024
2Investing.com, September 13, 2024
3The Wall Street Journal, September 10, 2024
4The Wall Street Journal, September 11, 2024
5CNBC.com, September 12, 2024
6The Wall Street Journal, September 13, 2024
7MarketWatch.com, September 12, 2024

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