Heading Into Fall, not “A fall”

The S&P 500 index fell -0.7% last week, ending September’s trading with the index’s largest monthly loss since December 2022 and its first quarterly loss in a year amid higher interest rate policy worries.  The S&P 500 ended the quarter with a -3.6% decline.  This is its first quarterly loss since Q3 of 2022. The index is still positive for the year, gaining +12% since the start of 2023.

The S&P 500 ended Friday’s session at 4,288, down from last week’s closing level of 4,320. September ended down -4.9%. Even so, the S&P 500 is still positive for 2023 with a year-to-date gain of more than +12%.  Unfortunately, without the help of mega cap technology growth stocks, the equal weighted index is flat to marginally down year to date.

Over the weekend, a government shutdown was avoided for the next 45 days.  Historically, since 1995, there have been 5 government shutdowns. The S&P 500 traded positive during each of those periods with an average return of +3.2%. The most recent government shutdown, from Dec 22, 2018, to Jan 25, 2019, which was the longest in the last 30 years, saw the S&P 500 trade higher by more than +10%.  It’s safe to say that stock markets universally like seeing less of politicians versus more of them.

 As they have all year, interest rate sensitive sectors were the laggards on the week.  Utilities had the largest percentage drop of the week, falling -7.0%, followed by a -2.1% slide in consumer staples and declines of -1.6% each in financials and real estate. Two sectors managed to post gains: Energy rose +1.3% and materials edged up +0.2%.

The utilities sector’s decliners included shares of NextEra Energy (NEE), which plunged -15% as Chesapeake Utilities Corp. (CPK) unveiled an agreement to acquire Florida City Gas from NextEra Energy for $923 million in cash. An underwhelming price versus prior estimates. Analysts reduced their price targets on NextEra Energy’s stock. In consumer staples, shares of Conagra Brands (CAG) fell -5.0% as JPMorgan Chase cut its price target on the stock to $32 per share from $37 while maintaining a neutral investment rating on the shares.  On the economic front, this week investors will focus on September employment data, with ADP’s report on private sector employment expected on Wednesday and the Labor Department’s closely watched September payrolls and unemployment rate due Friday.

We continue to track “normal” seasonals almost to the week.  See below chart:

 

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Click here to watch the Oak Harvest Weekly Stock Talk: Setting up for Fall.