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Weekly Economic Update - 9-16-2024

9/16/2024 brad

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Economic Update 9-16-2024

  • Economic data for the week included producer price inflation continuing to decelerate, as did consumer price inflation to some degree, although rising shelter costs remain a persistent influence. Consumer sentiment came in a bit better than expected, although expectations for future inflation were mixed.
  • Stocks saw gains globally as markets digested central bank policy easing and the close U.S. Presidential election. Bonds fared positively across the board as yields fell. Commodities rose across the board, due to the strength in metals.

U.S. stocks saw gains last week, to reverse the negativity of the prior week. They also shook off mixed results mid-week that included the relief of decelerating CPI but perhaps not enough to fully satisfy the Fed, in addition to perhaps the strong debate performance by Vice President Harris, which Wall Street viewed as raising the odds of higher taxes and regulation, and a less corporate-friendly environment generally. The magnitude of the upcoming Federal Reserve rate cut (as in -0.25% or -0.50%) remained an open question by week’s end.

By sector, technology rebounded with gains of over 7% (led by a 16% gain for Nvidia after a positive outlook on AI, and strong returns from Microsoft), followed by consumer discretionary and communications. Energy lagged as the only sector to end the week with a minor decline, followed by financials with a sub-1% increase. Real estate also gained several percent along with falling yields.

Foreign stocks saw positive results, with gains in Japan, Europe, and emerging markets outpacing the U.K. by a bit, as the latter experienced weaker-than-expected economic growth results. The week in Europe was highlighted by the ECB cutting their key rate for the second time by -0.25% to a level of 3.50%, as expected, but did not provide much in terms of future guidance. In emerging markets, leadership from Mexico, Taiwan, and South Korea outpaced minimal changes in China.

Bonds experienced gains again, as U.S. Treasury yields fell across the curve, with returns similar across governments and corporates. International bonds rose along with ECB rate cuts, as did emerging market debt, perhaps due to rising chances of a Harris presidency deemed more favorable for lower-tariff global trade.

Commodities gained across the board for the week, led by precious metals and industrial metals, each up over 4%, followed by gains of a few percent in agriculture. Crude oil rose slightly to $69/barrel, after bouncing around in price during the week. Hurricane Francine in the Gulf of Mexico, with key producers shutting down about a quarter of output in the region in response. During the Presidential debate, promises to support fracking may have been negative for markets in the near-term, with current perceived oversupply relative to demand—which could be exacerbated by a flood of further production. Industrial metals tied to potential green energy initiatives also fared well.

Period ending 9/13/2024

1 Week %

YTD %

DJIA

2.62

11.35

S&P 500

4.06

19.13

NASDAQ

5.98

18.43

Russell 2000

4.39

8.71

MSCI-EAFE

1.21

10.11

MSCI-EM

0.79

7.94

Bloomberg U.S. Aggregate

0.51

4.93

U.S. Treasury Yields

3 Mo.

2 Yr.

5 Yr.

10 Yr.

30 Yr.

12/31/2023

5.40

4.23

3.84

3.88

4.03

9/6/2024

5.13

3.66

3.50

3.72

4.03

9/13/2024

4.97

3.57

3.43

3.66

3.98

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.                                                                                    

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.