The S&P is having its best year of the millennium
From “Wake Me Up When September Ends” to “Dancing in September”
In 2024, the US stock market will not bow to the whims of the Gregorian calendar.
The S&P 500 started off September on a terrible note. But stocks bounced back to book a gain of 2% and end September at an all-time high — in defiance of the typical pattern that sees the benchmark US stock index go down in the ninth month of the year.
How’d the S&P 500 shake the September scaries?
Critically, economic data haven’t been that bad.
Sure, the the August jobs report was on the softer side, but most metrics released over the course of the month exceeded economists’ expectations — retail sales, industrial production, housing starts, building permits, and durable goods orders, to name a few. Oh, and second-quarter GDP growth was revised up to 3% quarter-on-quarter annualized. Other amended data showed that the US income growth and the savings rate had been higher than anticipated, undercutting a bear case that consumption would soon fall off a cliff.
In fact, the Citigroup US economic surprise index, which tracks data relative to analysts’ estimates, posted its biggest one-month improvement since June 2023 over the past month. This gauge, which tends to bottom in the summer months, is on the verge of breaking into positive territory for the first time since the start of May.
And the Federal Reserve was able to deliver a jumbo interest rate cut without spooking the market. So while there continues to be fraying around the edges of the job market, the rest of the economic data aren’t showing incremental signs of deterioration. And the Federal Reserve has shifted its focus away from getting inflation down towards making sure the US unemployment rate doesn’t go up much more.
Put it all together, and we’re looking at the best three-quarters of a year for the S&P 500 in the new millennium.
“The S&P 500 has now posted its strongest year to date advance of the 21st century so far up to Q3, having advanced more than +20% since the start of the year,” writes Deutsche Bank strategist Jim Reid.
