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Monthly Financial Insights – September

In this month’s Dechtman Wealth Management Financial Insights we discuss some of the major headlines that influenced markets in September and we also provide insight into what these developments could mean for you as an investor.

We just completed the 3rd quarter of 2018 and are now entering the year’s final stretch. Between July and September, the S&P 500, Dow, and NASDAQ all gained at least 7%. In fact, the S&P 500 had its best quarter since 2013.

However, last month’s performance contributed little to these strong gains.

Historically, September isn’t a particularly strong month for stocks. In the past 20 years, the S&P 500 has averaged a 0.8% loss in September. The major domestic indexes continued this trend last month, posting mixed returns. The NASDAQ lost 0.8%, the S&P 500 gained 0.4%, and the Dow grew by 1.9%.

This somewhat level performance came despite both the S&P 500 and Dow hitting new records during the month.

As has been the case throughout 2018, trade continued to be a hot topic in September. The U.S. and China imposed more tariffs on each other’s imports. However, Canada agreed to join the U.S. and Mexico in a new trade accord that would replace the North American Free Trade Agreement.

These geopolitical developments generated major headlines, but they weren’t the main drivers for recent stock performance. Instead, investors focused on the fundamentals.

September’s news gave us a lot to think about⎯from housing to retail and more.

Recent data indicates the housing market may be slowing. As prices increase and inventories stay low, many buyers can no longer afford to purchase homes. The challenge is especially noticeable in large cities, which could drive some people to relocate.

Reports also indicate that retail sales remained relatively flat. However, the pace may pick up again—tax cuts and a strong labor market mean consumers have more money to spend.In fact, consumers are feeling very good about the economy. The final result for September’s consumer sentiment index was above 100 for only the 3rd time ever. In addition, consumers’ expectations for their personal finances to improve reached the highest level since 2004.

Against this backdrop, Federal Reserve Chairman Jerome Powell said the economy is strong. He noted that inflation is close to the Fed’s 2% goal and the labor market is providing the jobs people need.Going into October, we have a lot to keep an eye on. From Italy’s financial concerns to the upcoming corporate-earnings season, both domestic and global data will be on our radar. Just as stocks often drop in September, October can bring volatility and the 4th quarter is often strong. Of course, past performance is no promise of future results. So, our goal will be to analyze current circumstances and keep you updated with notable market movements.

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