Rosalind Evans
Wall Street concluded its poorest month and quarter of 2023 on a negative note.
The S&P 500 receded 0.3% as earlier gains dissipated, and a significant portion of the stocks in the index declined. The Dow Jones dropped by 158 points (0.5%), whereas the Nasdaq managed a minor uptick of 0.1%.
Early stock advancements were negated as bond market dynamics came into play. Despite initial optimism regarding inflation, Treasury yields escalated during the day. The 10-year Treasury yield landed at 4.58%, hovering near its peak since 2007.
Rising Treasury yields, often viewed as safe havens, make stocks and riskier assets less appealing, contributing to the 4.9% decline in the S&P 500 for September, pulling the yearly gain down to 11.7%.
Wall Street is adjusting to this shift with the Federal Reserve leaning towards maintaining higher interest rates. High-interest rates, used by the Fed to target inflation, can potentially depress economic growth and asset prices.
The Federal Reserve’s primary rate is at a peak since 2001. There’s also speculation about a less aggressive rate cut next year than initially projected.
Recent economic data indicates subdued inflation and consumer spending in August. While this can ease inflationary pressures, it might challenge the economic growth momentum.
Brian Jacobsen, Annex Wealth Management’s chief economist, noted the cooling consumer spending trends, attributing them to rising energy prices and other factors.
Oil prices, hitting a year high, are impacting the broader economy. While U.S. crude witnessed a minor drop on Friday, it has significantly increased since June. The revival of U.S. student loan repayments could also divert consumer spending, which has been pivotal for economic sustenance.
The looming threat of another federal shutdown could pose challenges, especially with critical economic reports due in the coming weeks, which are vital for the Federal Reserve’s decisions.
On a brighter note, Nike’s stocks surged 6.7% due to impressive quarterly profits, primarily from overseas markets. Blue Apron’s stocks skyrocketed by 134.5% after an acquisition announcement by Wonder Group. In contrast, energy stocks suffered due to declining oil prices, with Exxon Mobil and Schlumberger experiencing drops.
Shares of Ford and General Motors also took hits after strike expansion news by the United Auto Workers.
In summary, the S&P 500 ended at 4,288.05, the Dow at 33,507.50, and the Nasdaq at 13,219.32. European indices showed mild positive movements in the global scene, while many Asian markets remained closed.
In retrospect, September painted a complex tapestry for Wall Street, marked by fluctuating stock values, global economic intricacies, and the persistent spectre of inflation. As markets brace for future uncertainties, investors will keenly watch the Federal Reserve’s moves and the global economic indicators. The coming weeks could shape the financial narrative for the remainder of 2023.
