Market Insights

The S&P 500 index fell 0.7% this week, capping September trading with the market benchmark's largest monthly loss since December 2022 and its first quarterly loss in a year amid rate policy worries.

The S&P 500 ended Friday's session at 4,288.05, down from last week's closing level of 4,320.06. This marks its fourth consecutive week in the red, putting its September return at a 4.9% loss, its second consecutive down month.

Friday also marked the end of Q3.

The S&P 500 ended the quarter with a 3.6% drop since the end of June, representing its first quarterly loss since Q3 of 2022. The index is still in positive territory this year, gaining 12% since the start of 2023.

The S&P 500 had climbed in the first half of the year on optimism that the Federal Open Market Committee would stop raising rates. While there have been pauses, investors are now bracing for another increase after the policy-setting committee lifted its median rate outlook last week for 2024 and 2025. Worries about this have fueled the index's recent declines.

Regular readers of this newsletter know how upsetting this is to me, given that the core inflation rate is only at a 2.4% annual rate over the last 3 months. But hey, I could be wrong; inflation could come back. It just does not seem likely to me.

Looking over the JP Morgan weekly update  (https://am.jpmorgan.com/us/en/asset...) I saw this chart [bold added]

 

 

 

 

 

 

 

 

 

 

The Russel 1000 is made up of the 1,000 largest companies in America. For all that Growth has outpaced Value over the course of this year (25% to 1.79%), Growth was so bad last year that Value still has a superior 3-year return, more than 10% higher.

So, I'll repeat what I said at the beginning of the year. I don't know which will fare better in the future, so I recommend an equal weighting between Growth stocks and Value stocks for long-term investors. But (as always), if you are willing to trade away some gains for less volatility, you should own more Value and less Growth.

As always, please reach out by email or just give me a call if you want to talk things over.

 

Stay the course.

 

All the Best!