September 2021 Market Update
What impacted markets over the last month?
- The big macro story over the last month revolves around reduced growth expectations for the third quarter, with U.S. GDP now expected to grow by 5.0% (on a quarter over quarter, seasonally adjusted and annualized basis). At the beginning of September, Q3 GDP growth was expected to be 6.8% (the median estimate across 66 economists polled monthly by Bloomberg).
How were diversified portfolios affected?
- Large Growth stocks were the only area of the U.S. equity market to make noise over the last month, and they are closing in on Small Value stocks for leadership in 2021. The percentage of companies contributing to market momentum has been trending lower; as of mid-September, only 43% of Nasdaq Composite, 50% of S&P Small Cap 600, and 75% of S&P 500 constituents are trading above their 200-day moving average.
- Globally, Pacific Stocks continue to trail European Stocks year-to-date but have narrowed the gap thanks to strong performance out of Japan. The country’s Nikkei 225 index is up more than 10% over the last month. The gains were driven primarily by a spike in performance that came after the nation’s current, and decidedly unpopular, Prime Minister announced he would be resigning after a year in office.
- The last month was largely a wash as far as bond returns are concerned, outside of long-duration U.S. Treasuries which were up 1.4%. Yields on 30-year U.S. Treasuries have held under 2% since mid-July.
What’s on the horizon?
- 9/22 – Markets are eager for additional insight into the anticipated tapering of monthly asset purchases as the FOMC (Federal Open Market Committee) meets.
- 10/1 – Demand for vehicles rebounded sharply from pandemic lows but has since pulled back by a decent margin. A global shortage in semiconductors is also impacting production levels, so the latest report on vehicle sales will be of interest.
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