September 30th Market Overview

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Happy Monday, everyone.

Not a ton of news to start off this week. I’m happy to see the last market day of this month sneak into green at the end of the day push. Notably, the Chinese market is generating significant momentum.

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Lets dig in…

Executive Summary

• S&P 500 closes in the green (▲0.22%), to end September trading on a positive note defying historical weakness

• Nasdaq outperforms with a 0.14% gain, while Dow Jones slips marginally (▼0.07%)

• VIX drops 1.53%, indicating reduced market anxiety as the month concludes

• Fed Chair Powell hints at rate cuts, emphasizing no preset path (why do they love to keep us guessing)

• Chinese stocks post biggest one-day rally since 2008, lifting U.S.-listed China ETFs

Market Overview

Despite some volatile trading sessions, all major indices are on track to finish September with gains - defying the month's historical reputation for weak performance.

This positive close to the quarter sets an interesting stage for the final quarter of 2024 with election day right around the corner.

Key Market Drivers

• Fed Chair Powell’s comments: More rate decreases possible, but no preset path. Markets reacted with a brief afternoon dip.

• Chinese stock surge: CSI 300 index posted an 8.5% gain, its biggest one-day rally since 2008, on better-than-expected manufacturing data.

• Small-cap potential: Wells Fargo strategist Christopher Harvey suggests small-caps could outperform with a Trump win, citing 5-10% potential upside over 1-3 months.

Stock Spotlight

1. $NVDA: Down nearly 3% since July, heading for first negative quarter since 2022. Signals shift in AI-driven rally.

2. $TSLA: is up 30% this quarter ahead of October 10 “We, Robot” robotaxi unveiling. Analysts skeptical about near-term revenue impact.

3. $CCL: Dropped almost 3% on weak Q4 guidance despite beating Q3 estimates. Full-year outlook disappoints Wall Street.

4. $STLA: Down over 13% after trimming full-year outlook, citing deteriorating global industry conditions.

5. $VIS: Emerged as top S&P 500 performer in September, up 39% amid utility sector strength.

Other Magnificent 7 Updates

• $MSFT: Down 4% for the quarter, reflecting broader tech sector pullback.

• $AAPL: Maintaining strong performance but investors advised to watch for potential volatility as Q3 closes.

Other Notable Company News

• $NIO: U.S.-listed shares were up13% premarket on $1.8 billion cash injection into Nio China.

• $CVS: Jumped 3.3% as hedge fund Glenview Capital plans executive meetings to boost performance.

• $BABA: Rose 4% after China’s central bank announced mortgage rate cuts on existing loans.

Sector Watch

Bond Market

High-yield bond funds delivered returns over 5% in Q3, with the three biggest high yield bond ETFs (USHY, HYG, JNK) all showing strong performance. This resilience suggests investors aren’t overly concerned about recession risks, as bonds with higher fixed yields become more attractive in a rate-cutting environment.

Policy Watch

The Fed’s recent 50 basis point rate cut and Powell’s comments continue to shape market expectations. Investors now anticipate two quarter-point rate cuts remaining this year, contingent on economic performance aligning with projections. The upcoming labor data release will be crucial for assessing economic health and potential Fed actions.

What to Watch

1. October volatility: Historically a period of extreme market swings, with notable drawdowns occurring in this month. Stay alert for potential market turbulence.

2. Labor market data: Upcoming reports will provide insights into economic health, potentially influencing Fed policy and market direction.

3. Q3 earnings season: As companies begin reporting, watch for signs of continued growth or potential slowdowns, especially in tech and AI-related sectors.

4. China’s economic recovery: Following the recent stock market surge, monitor ongoing developments in Chinese economic data and policy measures for global market implications.

P.S. 
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Note: This newsletter is intended for informational purposes only.