This week’s Steady Investor highlights key market updates that we believe should be on every investor’s radar, including:
- The decline in market volatility
- China boosts stimulus to support economy
- September consumer confidence plummets
Volatility Declines as Stocks Move Higher – Stocks have been marching higher in September, aided partly by the Federal Reserve’s pivot to looser monetary policy. Bonds have also been delivering strong performance, with yields on Treasuries and corporate bonds pushing lower. Recall that when bond yields fall, prices rise. While investors have been enjoying positive returns in equity and fixed-income markets, there has been another trend bolstering the ‘sleep-at-night’ factor: low volatility. The CBOE Volatility Index, often known as the VIX, has been in a downtrend throughout September, at one point reaching 15.39 – its lowest level of the month.1
CBOE Volatility Index (1-year)
Get Our Insights on the Stock Market During Election Year
The U.S. presidential election is just weeks away, and market predictions are flying. Many argue that the market will struggle depending on who wins, but history tells a different story.
In our latest September Market Strategy Report, we break down how elections impact the stock market and what matters more—like earnings, inflation, and interest rates.
This report also includes our insights on:
- How we can expect the election to affect the stock market
- A look at stock market returns in Republican and Democratic administrations
- The bottom line for investors
If you have $500,000 or more to invest and would like to learn more, request this report today!
Download Our Latest “September Market Strategy Guide”3
The low volatility – positive return setup harkens back to the first half of 2024, when stocks powered higher from AI-driven momentum with very few days of movement of more or less than 2%. Looking ahead, the ratio of put options to call options also fell to one of the lowest levels of the year, signaling that investors are generally feeling positive about the outlook.
China Increases Stimulus Measures in a Bid to Bolster Economy – China’s economic deceleration has long been a concern for investors, given its status as the world’s second-largest economy. An ailing property sector has combined weak domestic consumption to downshift China’s growth prospects, and investors have been waiting – to no avail so far – for a strong government response. New stimulus measures announced this week may be a turning point. On Tuesday, the People’s Bank of China (PBOC) announced it would cut its benchmark interest rate and allow banks to hold less cash in reserves relative to deposit levels, which should free up more capital for lending. Mortgage rates were also cut by 50 basis points, all in an effort to shore up the property sector. The PBOC also said it would offer $70 billion in loans for funds, brokers and insurers to buy Chinese stocks, and make about $50 billion available for share buybacks. To be fair, we would not go so far as to say that these stimulus measures will propel a strong turnaround for the Chinese economy and stock market. State intervention in equity markets is not something investors want to see. But the bottom line perhaps is that China’s economy is still expected to grow firmly in 2024, and these stimulus measures probably will not fundamentally alter that outlook—in either direction.4
September Consumer Confidence Plummets – The Conference Board’s Consumer Confidence survey for August 2024 was released this week, showing that respondents were feeling negative about economic activity. The September ‘current economic conditions’ poll fell -6.9 points to 98.7, marking the largest drop in over three years. The ‘expectations’ poll also saw a decline to 81.7, which may be worrisome considering the Conference Board sees 80 as a recession indicator. Readers may not want to jump to any conclusions here, however, as the expectations gauge has been below 80 for most of the past two and a half years, with no accompanying recession. Respondents may have felt dour in August because of reports of a weakening jobs market. We also may view this sentiment data as a contrarian – just as respondents were feeling more negative about the economy, the stock market rallied in September.5
Managing Your Portfolio in an Election Year – With the U.S. presidential election approaching, market forecasts are abundant, often suggesting that the outcome will dictate market performance.
In our latest September Market Strategy Report, you’ll get our expert thoughts, and some historical perspective, on the actual impact of the election on the stock market.
This report also includes our insights on:
- How we can expect the election to affect the stock market
- A look at stock market returns in Republican and Democratic administrations
- The bottom line for investors
If you have $500,000 or more to invest and would like to learn more, request this report today!
Download Our Latest “September Market Strategy Guide”6
Disclosure
2 Fred Economic Data. September 26, 2024. https://fred.stlouisfed.org/series/VIXCLS#
3 Zacks Investment Management reserves the right to amend the terms or rescind the free Market Strategy Report offer at any time and for any reason at its discretion.
4 MSN. 2024. https://www.msn.com/en-us/money/markets/as-growth-sputters-beijing-tries-again-to-jolt-china-s-economy/ar-BB1qA2xh
5 CNBC. 2024. https://www.cnbc.com/2024/09/24/september-consumer-confidence-falls-the-most-in-three-years.html
6 Zacks Investment Management reserves the right to amend the terms or rescind the free Market Strategy Report offer at any time and for any reason at its discretion.
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