Volatility Declines as Stocks Move Higher \u2013 <\/strong>Stocks have been marching higher in September, aided partly by the Federal Reserve\u2019s 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 \u2018sleep-at-night\u2019 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 \u2013 its lowest level of the month.1<\/sup><\/p>\n\n\n\n CBOE Volatility Index (1-year)<\/em><\/strong><\/p>\n\n\n\n Get Our Insights on the Stock Market During Election Year<\/a><\/u><\/strong><\/p>\n\n\n\n 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.<\/p>\n\n\n\n In our latest September Market Strategy Report<\/a><\/u><\/em><\/strong>, we break down how elections impact the stock market and what matters more\u2014like earnings, inflation, and interest rates.<\/p>\n\n\n\n This report also includes our insights on:<\/p>\n\n\n\n If you have $500,000 or more to invest and would like to learn more, request this report today!<\/p>\n\n\n\n Download Our Latest \u201cSeptember Market Strategy Guide\u201d3<\/sup><\/a><\/u><\/strong><\/p>\n\n\n\n The low volatility \u2013 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.<\/p>\n\n\n\n China Increases Stimulus Measures in a Bid to Bolster Economy \u2013 <\/strong>China\u2019s economic deceleration has long been a concern for investors, given its status as the world\u2019s second-largest economy. An ailing property sector has combined weak domestic consumption to downshift China\u2019s growth prospects, and investors have been waiting \u2013 to no avail so far \u2013 for a strong government response. New stimulus measures announced this week may be a turning point. On Tuesday, the People\u2019s 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\u2019s economy is still expected to grow firmly in 2024, and these stimulus measures probably will not fundamentally alter that outlook\u2014in either direction.4<\/sup><\/p>\n\n\n\n September Consumer Confidence Plummets \u2013 <\/strong>The Conference Board\u2019s Consumer Confidence survey for August 2024 was released this week, showing that respondents were feeling negative about economic activity. The September \u2018current economic conditions\u2019 poll fell -6.9 points to 98.7, marking the largest drop in over three years. The \u2018expectations\u2019 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 \u2013 just as respondents were feeling more negative about the economy, the stock market rallied in September.5<\/sup><\/p>\n\n\n\n Managing Your Portfolio in an Election Year \u2013 <\/strong>With the U.S. presidential election approaching, market forecasts are abundant, often suggesting that the outcome will dictate market performance.<\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1-2-1024x349.png\")
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