Presented by Mark Gallagher

A blowout jobs report helped propel the S&P 500 to its fourth consecutive week of gains.

Quick Hits

1. Report releases: Positive employment data led to a reassessment of a slowing economy.
2. Financial market data: Equities and yields rose on the back of the excellent jobs report.
3. Looking ahead: Inflation and Federal Reserve (Fed) meeting minutes will color rate
   policy expectations.

Report Releases—September 30–October 4, 2024

Institute for Supply Management (ISM) Manufacturing Index: September (Tuesday)

Manufacturer confidence was unchanged, leaving the index in contractionary territory for the month.

-Expected/prior ISM Manufacturing index: 47.5/47.2

-Actual ISM Manufacturing index: 47.2

ISM Services Index: September (Thursday)

Service sector confidence improved much more than expected, due in large part to a surge in new orders during the month.

-Expected/prior ISM Services index: 51.7/51.5

-Actual ISM Services index: 54.9

Employment Report: September (Friday)
Hiring surged, with an impressive 254,000 jobs added during the month. The unemployment rate fell to 4.1 percent, marking a three-month low.

-Expected/prior change in nonfarm payrolls: +150,000/+159,000

-Actual change in nonfarm payrolls: +254,000

The Takeaway

-After a string of softer reports, employment data was much better than expected, helping slow rate cut expectations.

-Service sector confidence improved much more than expected, leading to a solid week of economic data, marred only by a slightly lower-than-expected ISM manufacturing report.

Market Data

Equity

Source: Bloomberg, as of October 4, 2024

The S&P 500 and Nasdaq Composite registered a fourth consecutive week of gains after Friday’s impressive jobs report. That data helped bring back the soft-landing narrative after a few months of weaker economic data led to the Fed’s 50 basis point (bps) rate cut. Oil prices rose, along with geopolitical tensions between Israel and Iran. This helped lead to energy outperformance. Underperformers included apparel manufacturers, trucking, regional banks, home builders,
and electric vehicles.

Fixed Income

Source: Bloomberg, as of October 4, 2024

Yields rose across the curve after the jobs report, which lowered Fed rate cut expectations and caused investors to reassess economic growth expectations. After the employment report was released, the probability of a 50 bps rate cut in November dropped from roughly 50 percent to nearly 0 percent. The rise in shorter-term rates led to the Treasury yield curve inverting again because shorter-term rates rose more than long-term rates.

The Takeaway

-A blowout jobs report helped support equities, leading to a fourth consecutive week of gains.

-Yields rose as the narrative of a softening economy seemed to dissipate—along with the probability of another 50 bps rate cut next month.

Looking Ahead

This week, data will focus on the Fed’s meeting minutes, inflation, and consumer sentiment.

-The week kicks off with the trade balance, which is expected to fall modestly in August after increasing notably in July.

-Meeting minutes from the September Federal Open Market Committee (FOMC), expected on Wednesday, should provide insight into the decision-making that led to the 50 bps rate cut.

-On Thursday, the Consumer Price Index report for September will be released. It’s expected to show that headline inflation dropped to 2.3 percent and core inflation remained unchanged at 3.2 percent.

-We expect two reports on Friday: the Producer Price Index, which is set to show a 0.1 percent monthly increase; and the University of Michigan consumer sentiment survey, which is expected to show a modest decline.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher
Quick Hits

1. Stocks Rally in September to Cap Off Strong Third Quarter

Stocks continued to rise in September as improving fundamentals and lower interest rates supported returns.

2. Strong Quarter for Bonds

September capped off a strong quarter for bond investors.

3. Federal Reserve Cuts Interest Rates

The Fed lowered the federal funds rate in September for the first time in more than four years.

4. Healthy Economic Backdrop

Economic updates released during the month showed signs of continued growth.

5. Real Risks Remain

Markets face a variety of risks as we kick off the fourth quarter.

6. Cautious Optimism Warranted

The most likely path forward is for continued market appreciation and economic growth.

Stocks Rally in September

Stocks continued their recent rally in September, with all three major U.S. indices up for the month and quarter. The S&P 500 gained 2.14 percent in September and 5.89 percent for the quarter, while the Dow Jones Industrial Average (DJIA) was up 1.96 percent during the month and 8.72 percent for the quarter. Both the S&P 500 and DJIA hit new record highs in September before falling back modestly to end the month. The technology-heavy Nasdaq Composite gained 2.76 percent for the month and quarter as technology stocks experienced heightened turbulence over the summer compared to the broader market.

These positive results were supported by improving fundamentals. Per Bloomberg Intelligence, the average earnings growth rate for the S&P 500 in the second quarter was nearly 14 percent. This is well above analyst estimates at the start of earnings season for a more modest 8.3 percent increase. Because fundamentals ultimately drive long-term market performance, this was an encouraging development for investors as it showcased the continued health of American businesses.

Technical factors were supportive as well for the month and quarter. All three major indices spent the entire month well above their respective 200-day moving averages. (The 200-day moving average is a widely tracked technical signal, as prolonged breaks above or below this level can indicate shifting investor sentiment for an index.) All three of the major U.S. indices have spent the entire year above their respective trendlines, indicating continued investor support for U.S. stocks.

The story was similar internationally for the month and quarter. The MSCI EAFE Index gained 0.92 percent in September, capping off a 7.26 percent gain for the quarter. The MSCI Emerging Markets Index surged 6.72 percent in September, which contributed to an 8.88 percent gain for the quarter. The announcement of major stimulus policies in China toward the end of the month led to the outperformance for emerging markets in September.

Technical factors were supportive for international stocks during the month. Both indices spent the entire month above trend. This was especially encouraging for the emerging market index, which had previously briefly dipped below its 200-day moving average in early August.

Strong Quarter for Bonds

September was another positive month for bonds, capping off a strong quarter for fixed income investors. Falling interest rates over the month and quarter helped support bond returns throughout the summer. The 10-year Treasury yield fell from 4.48 percent at the start of July to 3.81 percent by the end of September. Short-term rates fell notably as well during the quarter due to heightened expectations for Fed rate cuts. The Bloomberg Aggregate Bond Index gained 1.34 percent during the month and an impressive 5.20 percent in the third quarter.

High-yield fixed income, which is typically less driven by interest rate movements, also had a strong month and quarter. The Bloomberg US Corporate High Yield Index gained 1.62 percent in September and 5.28 percent for the quarter. High-yield credit spreads compressed from 3.21 percent at the start of the quarter to 3.03 percent at quarter-end. Tighter credit spreads indicate increased investor appetite for high-yield investments.

Federal Reserve Cuts Interest Rates

The Fed cut the upper target of the federal funds rate by 50 basis points at the conclusion of its September meeting. This brought the upper limit from 5.50 percent down to 5.0 percent. As you can see in Figure 1, this marked the first interest rate cut in more than four years and indicates that the Fed is shifting away from the restrictive monetary policy that we’ve recently experienced in favor of more supportive policy ahead.

Figure 1: Federal Open Market Committee Federal Funds Target Rate Upper Limit, October 2016–Present

Source: Federal Reserve Board/Haver Analytics, September 18, 2024.

The 50-basis-point cut was larger than most economists had anticipated; however, it was in-line with market pricing heading into the meeting. Fed chair Jerome Powell indicated in his post-meeting press conference that the Fed remains committed to its dual mandate of promoting stable prices and maximum employment. Given the improvements that we’ve seen on the inflation front over the past two years, central bankers decided that the time was right to shift toward a more accommodative policy given recent signs of potential weakness in the labor market.

Markets rallied following the Fed’s announcement, as lower interest rates can help support valuations and fundamentals. Looking forward, futures markets have priced in expectations for additional rate cuts through the end of this year and into 2025. Although the Fed raised rates throughout 2022 and 2023 and kept them high in 2024 to combat inflation, looking ahead, this headwind is set to shift into a tailwind for markets and the economy.

The Takeaway

-The Fed cut interest rates by 50 basis points at its September meeting.

-Further rate cuts are expected through the end of this year and into 2025.

Healthy Economic Backdrop

While interest rates were the primary story in September, economic updates released during the month were also encouraging. Hiring rebounded as a solid 142,000 jobs were added in August, up from a downwardly revised 89,000 in July. The unemployment rate also fell from 4.3 percent in July back down to 4.2 percent in August. While the pace of hiring has slowed since earlier in the year, slower growth is still growth, and job creation at these levels is a sign of continued economic expansion, especially following years of above-average job growth.

One of the benefits from the recent years of strong hiring that we’ve seen is that consumers remain willing and able to spend. That remained the case in August as retail sales growth came in above economist estimates and personal spending grew for the 17th consecutive month. Consumer spending is the major driver of U.S. economic activity and has remained impressively resilient over the course of the year.

Business activity was also healthy during the month, as durable goods orders came in above estimates. Industrial and manufacturing production also rebounded well past expectations following weather-driven declines earlier in the summer.

Finally, we even saw improvements on the inflation front, with year-over-year CPI growth falling to 2.5 percent in August, down from 2.9 percent in July. This marks a more than three-year low and highlights the improvements that we’ve seen over the past two years when it comes to inflation. While there is still real work to be done to get inflation back to the Fed’s 2 percent target, the continued improvement in August was certainly welcome.

The Takeaway

-The economic data releases in September showed signs of continued economic growth.

-Hiring rebounded in August and consumer spending remained robust.

-Inflation continued to fall, highlighting the improvements that we’ve seen over the past two years.

Real Risks Remain

While the fundamentals and economic backdrop remain supportive for investors, there are real risks that markets face, which should be mentioned. The primary risk domestically is a further economic slowdown in the months ahead. The labor market will be key to monitor here, as any additional weakness could be a sign of potential slowing economic growth. Additionally, political uncertainty is expected to continue to rise as we approach the November elections.

Foreign risks remain as well, as shown by the ongoing conflicts in Ukraine and the Middle East as well as the slowdown in China. These sources of potential uncertainty could escalate and lead to additional regional and global market volatility. And, of course, there are also the unknown risks that could negatively impact markets at any time.

The Takeaway

-The health of the labor market and rising political uncertainty are risks worth monitoring.

-International and unknown risks should be acknowledged as well.

Cautious Optimism Warranted

Despite the real risks that markets face, overall, we remain in a relatively good place as we finish out the third quarter and head into the end of the year. Market fundamentals remain sound and the economic backdrop is expected to remain broadly supportive through the end of the year. Additionally, the headwind from high interest rates that we’ve experienced over the past two years is set to transition to a tailwind in the months ahead.

While there are certainly sources of potential uncertainty that investors should be aware of, the outlook remains cautiously optimistic as further market appreciation and economic growth remains the most likely path forward. Of course, we may face short-term setbacks along the way and, therefore, a well-diversified portfolio that matches investor goals and timelines remains the best path forward for most. As always, if concerns remain, you should speak to your financial advisor to review your financial plans.

Disclosure: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Propelled by Chinese stimulus measures, international equities led the way last week. The yield curve steepened slightly. Economic data was mixed: business confidence rose but consumer confidence and personal spending reports disappointed.

Quick Hits

1. Report releases: Personal income and spending growth slowed in August.
2. Financial market data: China launched a slew of measures to support its stock market and consumers.
3. Looking ahead: This week’s data will focus on business confidence and employment.

Keep reading for an in-depth look.

Report Releases—September 23–27, 2024

Preliminary S&P Global US Composite PMI: September (Monday)

The S&P Global US Composite PMI fell but was better than expected. Services came in as expected at 55.2. Manufacturing, on the other hand, rose but fared slightly worse than expected at 48.6. Because the services component makes up the majority of the U.S. economy, the overall rise was welcome.

-Expected/prior month composite PMI: 54.0/54.6

-Actual composite PMI: 54.4

Conference Board Consumer Confidence Index: September (Tuesday)

Consumer confidence fell more than expected due to worsening consumer views on current economic conditions. Concerns about the health of the labor market were the cause of the souring confidence.

-Expected/prior month consumer confidence: 104.0/105.6

-Actual consumer confidence: 98.7

Preliminary Durable Goods Orders: August (Wednesday)
Headline durable goods orders were unchanged, defying economist forecasts for a drop. Core order growth also impressed, rising a healthy 0.5 percent against calls for a 0.1 percent increase.

-Expected/prior durable goods orders monthly change: –2.6%/+9.9%

-Actual durable goods orders change: +0.0%

-Expected/prior core durable goods orders monthly change: +0.1%/–0.1%

-Actual core durable goods orders change: +0.5%

Personal Spending and Personal Income: August (Friday)
Although personal income and spending growth came in below economist estimates, August was the 17th consecutive month with spending growth.

-Expected/prior personal income monthly change: +0.4%/+0.3%

-Actual personal income change: +0.2%

-Expected/prior personal spending monthly change: +0.3%/+0.5%

-Actual personal spending change: +0.2%

The Takeaway

-Business confidence, as measured by S&P Global US Composite PMI, increased slightly in September.

-Consumer confidence and personal spending missed expectations in September and August, respectively. 

Financial Market Data

Equity

Source: Bloomberg, as of September 27, 2024

Emerging and international markets led the way as China rolled out multiple stimulus measures to try to lift consumer confidence and achieve its goal of 5 percent economic growth by GDP. The measures included cuts to bank reserve rates and medium-term lending rates; a swap facility to fund brokers, funds, and insurers; and another fund to help facilitate company buybacks. The result was a move of more than 18 percent, as measured by the MSCI China Index. European stocks also rallied, sending the MSCI EAFE higher.

Fixed Income

Source: Bloomberg, as of September 27, 2024

The yield curve continued to steepen on the margins as short-term rates fell and long-term rates rose incrementally. The 2-year fell 1 basis point (bp) to close at 3.56 percent. The 10- and 30-year yields increased 2 bps and 3 bps, respectively, closing at 3.75 percent and 4.1 percent, respectively.

The Takeaway

-China was the story, launching multiple stimulus measures and propelling emerging markets higher.

-The yield curve steepened slightly.

Looking Ahead

This week’s data will focus on business confidence and the employment picture.

-The week kicks off on Tuesday with the release of the JOLTS Job Openings Report for August and ISM Manufacturing index for September. Job openings have fallen an average of roughly 280,000 over the past two months. Investors will watch to see if the trend eases. Manufacturer confidence is expected to improve modestly yet remain in contractionary territory in September.

-On Thursday, the ISM Services index for September will be released. Service sector confidence is expected to remain unchanged after improving more than expected in August.

-Finally, the week will wrap on Friday with the employment report for September. Hiring is set to slow; economists expect to see that 130,000 jobs were added. The unemployment rate is expected to remain unchanged at 4.2 percent.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Equities continued to move higher. The Federal Open Market Committee (FOMC) cut the federal funds rate 50 basis points (bps). Economic data was mixed; retail sales and industrial production surprised to the upside, whereas existing home sales disappointed.

Quick Hits

1. Report releases: Retail sales and industrial production grew more than expected in August.
2. Financial market data: Equities, paced by mega-cap names, continued to rise.
3. Looking ahead: This week, we expect data on consumer confidence, durable goods, and personal income and spending.

Keep reading for an in-depth look.

Report Releases—September 16–20, 2024

Retail Sales: August (Tuesday)

Retail sales beat analyst estimates, with headline sales rising 0.1 percent against calls for a modest decline. This marks two consecutive months with stronger-than-expected consumer spending growth.

-Expected/prior month retail sales monthly change: –0.2%/+1.1%

-Actual retail sales monthly change: +0.1%

Industrial Production: August (Tuesday)

Industrial production rebounded after experiencing a weather-driven production decline in July. Manufacturing output rose notably, helping drive better-than-expected industrial production growth.

-Expected/prior month production change: +0.2%/–0.9%

-Actual production change: +0.8%

FOMC Rate Decision: September (Wednesday)
The Federal Reserve (Fed) surprised many economists by cutting the range for the federal funds rate 50 bps after September’s FOMC meeting. Although many economists had expected a reduction of 25 bps, fixed income markets had largely priced in the possibility of a larger cut. Markets rallied immediately after the announcement.

-Expected/prior federal funds rate upper limit: 5.25%/5.50%

-Actual federal funds rate upper limit: 5.00%

Existing Home Sales: August (Thursday)
The pace of existing home sales fell more than expected, dropping the pace to a 10-month low.

-Expected/prior month existing home sales change: –1.3%/+1.5%

-Actual existing home sales change: –2.5%

The Takeaway

-The Fed started its rate-cutting cycle with a 50 bps reduction on Wednesday.

-August retail sales and industrial production were better than expected.

Financial Market Data

Equity

Source: Bloomberg, as of September 20, 2024

Equities continued their rally after the Fed announced its rate cut. Mega-cap names lifted the market, with Apple, Meta Platforms, Amazon, and Alphabet each rising more than 2.5 percent. Nvidia fell 2.6 percent after a strong rally the previous week. FedEx also struggled, tumbling more than 11 percent after cutting full-year earnings guidance as demand moved toward less profitable deliveries.

Fixed Income

Source: Bloomberg, as of September 20, 2024

The most impactful news was the 50 bps cut from the Fed, leaving the federal funds target range at 4.75 percent–5 percent. The Treasury yield curve beyond the 2-year saw modest steepening. The 10-year is now 15 bps above the 2-year as the yield curve begins to normalize after being inverted since July 2022. The 10-year closed the week at 3.73 percent. The 2-year and 30-year closed at 3.57 percent and 4.07 percent, respectively.

The Takeaway

-Equities, paced by several mega-cap companies, continued their move higher.

-The FOMC cut the federal funds rate 50 bps.

Looking Ahead

This week’s data will focus on consumer confidence, durable goods, and personal income and spending.

-The week kicks off on Monday with the preliminary release of S&P Global US Composite PMI, which is expected to decline slightly from 54.6 in August, led by a decline in the service sector.

-On Tuesday, we expect the release of the Conference Board Consumer Confidence Index for September. Consumer confidence is expected to remain unchanged after improving more than expected in August.

-Preliminary durable goods orders for August is expected on Thursday. Headline durable goods orders are set to fall after surging in September. The less volatile core goods orders measure is expected to show continued modest improvement.

-The week wraps on Friday with personal income and spending for August. Personal income and spending are set to rise. Although spending growth is expected to slow compared with July, this would still mark an impressive 17 consecutive months with personal spending growth.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network