Bulls sustain September push

Barring a sharp sell-off today, the S&P 500 (SPX) will post a net gain for September.

If that elicits a “so what?” shrug, consider that it will be only the fourth positive September of the past 11 years, and the SPX did it despite closing at a nearly one-month low on September 6.

As bulls continued to steer stocks higher amid moderate inflation and mostly solid economic data, last week marked the index’s second-straight week of record highs:

The headline: More records for stocks as jobs report awaits.

The fine print: The SPX’s September 6 low followed a weaker-than-expected monthly jobs report. With the markets laser-focused on economic growth and employment, a surprise from this week’s report has the same potential for volatility—up or down.

The number: 0.1%, the month-over-month inflation increase in Friday’s core PCE Price Index—down from a month earlier and below estimates.

The scorecard: The SPX still has a slight lead for the year, but the Nasdaq 100 (NDX) tech index narrowed the gap last week. The Russell 2000 (RUT) small cap index was the only major benchmark to lose ground:

Sector returns: The strongest S&P 500 sectors last week were materials (+3.4%), consumer discretionary (+1.8%), and industrials (+1.6%). The weakest sectors were health care (-1%), energy (-0.8%), and financials (-0.5%).

Stock movers: Tectonic Therapeutic Inc Com (TECX) +21% to $29.40 on Wednesday, Kalvista Pharmaceuticals (KALV) +23% to $12.34 on Friday. On the downside, Laser Photonics (LASE) -19% to $11.90 on Wednesday, Concentrix (CNXC) -19% to $51.54 on Thursday.

Futures: December gold (GCZ4) hit record intraday or closing highs every day but Friday last week, ending the week up $35.90 at $2,658.05. After hitting a three-week high last Tuesday, November WTI crude oil (CLX4) broke sharply lower for two days, closing Friday down nearly $3 for the week at $68.15. Week’s biggest gains: December cocoa (CCZ4) +8.1%, December soybean meal (ZMZ4) +7.8%. Week’s biggest declines: December palladium (PAZ4) -5.9%, October butter (CBV4) -5.8%.

Any comments Fed Chairman Jerome Powell makes on Monday will be analyzed in excruciating detail, but after that, this week is mostly about the labor market:

●Monday: Chicago PMI, Jerome Powell speaks at the National Association for Business Economics (NABE) annual meeting.
●Tuesday: S&P Global Manufacturing PMI, ISM Manufacturing Index, Job Openings and Labor Turnover Survey (JOLTS), construction spending
●Wednesday: ADP Employment Change
●Thursday: Challenger job cuts, weekly jobless claims, S&P Global Services PMI, ISM Services Index, Factory Orders
●Friday: Employment Report

This week’s earnings include:

●Monday: Carnival (CUK), ReposiTrak (TRAK)
●Tuesday: Acuity Brands (AYI), Lamb Weston (LW), McCormick & Co. (MKC), Paychex (PAYX), United Natural Foods (UNFI), Cal-Maine Foods (CALM), Nike (NKE)
●Wednesday: Conagra Brands (CAG), RPM International (RPM), Levi Strauss (LEVI)
●Thursday: Constellation Brands (STZ)
●Friday: Apogee Enterprises (APOG)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Gold making record highs is one thing, the stock market doing it is another.

And the two setting records simultaneously—as has been the case over the past couple of weeks—is yet another. Historically, gold has made many of its biggest upside runs during periods of economic and market stress (think 2008-2009 or 2020). So it’s somewhat unusual for it to be pushing to record levels when the stock market is also establishing bullish milestones.

But as of Friday, gold was up 28.8% for the year, more than eight percentage points more than the SPX. Since 1970, gold outperformed the SPX in 25 years and underperformed it in 29. But of the 30 times the SPX had a positive annual return, gold outperformed it only 14 times. And when the SPX had a double-digit annual return, gold outperformed the SPX only eight times.

There may be three months left in 2024, but history suggests the SPX has a better-than-average chance of closing out the year with a double-digit percentage gain. Since 1970, there has been only one year (1987) that the SPX ended a year up less than 10% when it was up 15% or more at the end of September. And of the 14 years it was up 15% or more at the end of Q3, it was even higher by the end of the year 11 times.

Finally, last week’s market-leading performance by the S&P 500 materials sector was driven by gains in the metals and mining group, which likely got a boost from the gains in gold, silver, and copper.

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¹ Figures reflect monthly and annual prices for spot gold and the S&P 500 (SPX) index, 1957–2024.