Most major U.S. equity indices ended little changed in September. With the help of dividends, the S&P 500 inched ahead by 0.02% for the month. Small cap stocks, as measured by the Russell 2000, fared better increasing by 1.11%. The battle for style leadership flip-flopped during the month, with growth stocks increasing and value stocks decreasing – the mirror image of last month’s activity. International stocks, both developed and emerging, outperformed U.S. markets. Developed international markets increased by 1.23% and emerging markets increased by 1.32%.

Interest rates provided challenges and opportunities during the month with the steepening of the yield curve, as the rates on shorter maturity fixed income decreased and longer maturity rates increased. The Barclays Aggregate Bond Index declined by 0.06% for the month as the two major components, Treasuries and investment grade corporates, both posted negative returns (-0.13% & -0.25%, respectively). The Barclays High Yield Index managed a small increase of 0.15% for the month.


Monthly Recap

Major U.S. equity indices were little changed in September. Growth stocks generated positive returns and outpaced the losses posted by value stocks. Small caps beat large caps again. Developed and emerging international stocks were positive and led U.S. stocks.


In a departure from recent history, the yield curve steepened in September, with short term rates declining and longer term rates increasing. Treasuries and investment grade corporates declined in value. High yield managed to post a modest positive return.


The big news of the month was the Fed’s announcement on September 21 leaving rates unchanged. This marks the sixth meeting this year where rates were left unchanged. Two more meetings are scheduled in 2016, with very low probability of a rate change at the November meeting and a higher probability of a rate increase in December. Job creation disappointed in the month of August (data released in September), breaking a two month streak of job creation falling just short of the magical 300 thousand mark. Most economic data weakened during September, with the notable exception of consumer confidence, which recorded a post-recession high. Weak second quarter economic growth was confirmed. All eyes are watching for a fall/early winter economic rebound and, of course, the polls to glean information about the rapidly approaching presidential election.

Event Period Estimate Actual Prior Revised
Nonfarm Payroll Aug 180,000 151,000 255,000 275,000
Unemployment Aug 4.80% 4.90% 4.90%
ISM Manufacturing Aug 52.0 49.4 52.6
Univ. of Mich. Sentiment Sep (P) 90.6 89.8 89.8
ISM Non-Manufacturing Aug 54.9 51.4 55.5
Retail Sales ex Auto & Gas Aug 0.30% -0.10% -0.10%
PPI MOM Aug 0.10% 0.00% -0.40%
PPI MOM ex Food & Energy Aug 0.10% 0.10% -0.30%
PPI YOY Aug 0.10% 0.00% -0.20%
PPI YOY ex Food & Energy Aug 1.00% 1.00% 0.70%
CPI MOM Aug 0.10% 0.20% 0.00%
CPI MOM ex Food & Energy Aug 0.20% 0.30% 0.10%
CPI YOY Aug 1.00% 1.10% 0.80%
CPI YOY ex Food & Energy Aug 2.20% 2.30% 2.20%
Industrial Production Aug -0.20% -0.40% 0.70% 0.60%
Housing Starts Aug 1,190,000 1,142,000 1,211,000 1,212,000
Building Permits Aug 1,165,000 1,139,000 1,152,000 1,144,000
New Home Sales Aug 600,000 609,000 654,000 659,000
Existing Home Sales Aug 5,450,000 5,330,000 5,390,000 5,380,000
Leading Index Aug 0.00% -0.20% 0.40% 0.50%
Durable Goods Orders Aug (P) -1.50% 0.00% 4.40% 3.60%
S&P CoreLogic CS 20-City YOY Jul 5.10% 5.02% 5.13% 5.11%
Personal Income Aug 0.20% 0.20% 0.40%
Personal Spending Aug 0.10% 0.00% 0.30% 0.40%
GDP Annualized QOQ 2Q (T) 1.30% 1.40% 1.10%

Click here for a PDF of Glenn Dorsey’s Monthly Recap

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