Marin Wealth Advisors, LLC.

Registered investment Advisor

October 2, 2022

Miserable Week Ends Miserable Month Ends Miserable Quarter (September 30 Market Recap)

Indices 

  • Dow 28,725 –865 or –2.9%. 
  • Nasdaq 10,575 -292 or –2.7%. 
  • S&P 3,585 -108 or –2.9%. 
  • USD10Y 3.804% +10.7bp or +2.9%. 
  • WTI Crude $79.49/bbl  +$0.06 or +0.07%. 

Miserable Week… 

All three indices were down considerably all week apart from a brief relief rally on Wednesday and a small uptick for the Nasdaq on Tuesday as the fallout from the Federal Reserve’s ongoing rate tightening cycle continues to reverberate throughout global economies and markets. Monday was a big day in all the worst ways: the S&P 500 broke through its support level established during the June lows on Monday and continued to fall, setting a new 2022 low on Friday’s close at 3,585, the Dow closed down more than 20% from its January 4 high, signifying a bear market, and Euro fell to a 20-year low against the dollar. 

Economic data continued to be mixed. While September Consumer Confidence was better than expected, jobless claims fell, and August New Home Sales were up sharply, the most important data of the week, the Personal Consumer Expenditure, a closely watched Fed measure of inflation, was higher than expected at +4.9% Core (excluding food and energy) year over year and +0.6% month over month. The inflation data plus the strong jobs number will probably continue to pressure markets this week. 

Ends Miserable Month… 

For September the Dow tumbled 8.8%, while the S&P fell 9.3%, and the Nasdaq lost 10.5%. 

Ends Miserable Quarter 

The third quarter came to a merciful end; the Dow was down 6.7%, the Nasdaq lost 4.1%, and the S&P was down 5.3%. 

Bright Spot? 

With the decline in prices of equities, the forward price to earnings ratio of the S&P 500 has fallen below its 5 and 10-year averages at 15.4 (vs 18.6 and 17.1 respectively). This should provide some support for equities, unless of course, earnings begin to decline. As a reminder, the Price to Earnings ratio is as follows…stock XYZ trades at $10. Its 2023 earnings estimate is $2/share. $10/$2 = XYZ trades at a P/E ratio of 5.

Next Week 

It is a busy week with economic data next week with the most important data points on Tuesday with August JOLTS and Friday’s September Non-Farm Payrolls report.

Economic Calendar 

  • Monday – September Final S&P Manufacturing PMI, Sept ISM Manufacturing Index. 
  • Tuesday – August JOLTS and Factory Orders. 
  • Wednesday – September ADP Jobs Report, September Final S&P Services PMI and ISM Services Index. 
  • Thursday – Initial Jobless Claims. 
  • Friday – September Non-Farm Payrolls, Unemployment Rate. 

If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review. 

September 30 Daily Trading Recap… 

Monday – Dow -329 to 29,260, Nasdaq -65 to 10,802, S&P -38 to 3,655, USD10Y +18.1bp to 3.878%. 

Tuesday – Dow –125 to 29,134, Nasdaq +26 to 10,829, S&P -8 to 3,647, USD10Y +8.6bp to 3.964%. 

  • Seven of eleven S&P sectors traded down today, led lower by Consumer Staples, Utilities, and Real Estate. 
  • August Durable Goods Orders beat expectations at –0.2% vs –0.5% and vs last month’s -0.1% print. 
  • September Consumer Confidence was 108, higher than expectations of 104.5 and last month’s 103.6 print.  
  • August New Home Sales were up sharply to 685,000 units vs expectations of 500,000 and last month’s 532,000 report. 
  • While the USD10 year yield has soared nearly 25bp over the last two days, the yield curve is still inverted. The USD2 year yield is 33bp higher at this time. 

 Wednesday – Dow +548 to 29,683, Nasdaq +222 to 11,051, S&P +71 to 3,719, USD10Y –25.9bp to 3.705%. 

  • All eleven S&P sectors traded higher, led by Energy, Communication Services, and Consumer Discretionary. 
  • The Bank of England said it would purchase bonds to steady financial markets and help support the cratering British pound. This led to today’s broad market rally. 
  • The US10YR yield fell more than 25bp on the BoE news. 

 Thursday – Dow -458 to 29,225, Nasdaq -314 to 10,737, S&P -78 to 3,640, USD10Y +4.2bp to 3.747%.  

  • All eleven S&P sectors traded down today, led lower by Utilities, Consumer Discretionary, and Real Estate. 
  • Jobless claims were lower for the sixth consecutive week at 193,000 claims vs 215,000 expected and last week’s revised lower 209,000 print (originally was 213,000) and were the catalyst for today’s sell off (additional inflation concerns). Continuing claims fell 29,000 to 1.35 million, the lowest level since the beginning of July. 
  • Apple (APPL) added to the sell-off as it was downgraded at Bank of America and fell 4.9%. 
  • Nike (NKE) beat their revenue numbers but missed their earnings estimates blaming supply chain and inventory issues. NKE traded down –9.21% post-close. 
  • Final revised Q2 GDP was –0.6% and Q1’s –1.6% was confirmed. 

Friday – Dow -500 to 28,725, Nasdaq –161 to 10,575, S&P -55 to 3,585, USD10Y +5.7bp to 3.804%. 

  • Ten of eleven S&P sectors traded down today led lower by Utilities, Technology, and Consumer Discretionary. 
  • August Headline Personal Consumption Expenditure (PCE) was +0.3% vs last month’s -0.1% but year-over-year declined to +6.2% vs last month at +6.4%. 
  • August Core PCE was +0.6% vs expectations of +0.5% and last month’s +0.0% print. However, year-over-year Core PCE increased to +4.9% vs expectations of +4.7% and last month’s +4.6%. 
  • August Final University of Michigan Consumer Sentiment was 58.6 vs expectations of 59.5 and last month’s print of 59.5. 
  • August Final University of Michigan 5-year inflation expectation settled at 2.7% down from last month’s 2.8%. 

If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review. 

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.