*Performance since 7/1/2022. For more details on the performance calculation and methodology of Alpha Picks, click here. |
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*Performance since 7/1/2022. For more details on the performance calculation and methodology of Alpha Picks, click here. |
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► September is historically the worst month for the U.S. stock market, but stocks may be poised for September's first gain since 2019. U.S. indices were positive this week after celebrating the Fed's supersized 50 bps interest rate cut – its first in four years. Markets rallied with the S&P 500 experiencing another one of its best days of the year on Thursday, rising 23.11 points, and ending at 5,745.37. The Nasdaq added 108.09 points on Thursday, and the Dow posted its second-highest-ever close, ending at 42,175.11.
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► September's consumer confidence fell on a negative view of the current labor market, sliding to 98.7 from 105.6. Dana M. Peterson, Chief Economist at The Conference Board, stated that consumers are pessimistic about the future labor market conditions and less optimistic regarding future business conditions and income.
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► Boeing has made a 'best and final' offer to end its strike that's impacting over 33,000 workers. The Aerospace & Defense company has entered its second week of the strike, just as the International Longshoremen's Association (ILA), representing ~85,000 longshoremen, has threatened to strike. The ILA strike would shut down five of the 10 busiest ports in North America and potentially be so big it could dent the Jobs Report.
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► Despite the Fed's 50 bps cut, U.S. Treasury yields rose in an attempt to price in higher growth, as traders assess the nominations for the upcoming U.S. Presidential election and potential impacts on the markets. Foreign investments in U.S. Treasuries have been rising, with the yield on the 10-year U.S. Treasury dipping to a low of 3.62% before last Wednesday's rate cut, and now standing at 3.77%.
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Fed Delivers Supersized Rate Cut to Kickstart Easing Cycle
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Federal Reserve Chair, Jerome Powell, announced an aggressive 50-basis point rate cut last week, the first easing move since 2020. This decision, nearly unanimous in an 11-1 vote, underscores the Fed's commitment to supporting the economy amid inflation concerns and global economic uncertainties. The rate cut aims to cushion the economy against potential downturns, particularly focusing on sustaining labor market strength as inflation trends closer to the Fed's 2% target. Powell highlighted that the recalibrated policy stance is a proactive measure to avoid falling behind the curve, as was the case in 2021 when the Fed underestimated the persistence of inflation. The aggressive cut has prompted mixed reactions from the market. It initially boosted the S&P 500 to all-time highs before settling down. Futures markets, however, indicated a strong overnight rally, suggesting ongoing investor optimism about the Fed's commitment to a soft landing. The Core PCE Price Index edged up 0.1% M/M in August, less than the +0.2% expected and easing from +0.2% in July, the Commerce Department's Bureau of Economic Analysis said on Friday.
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Last week, geopolitical tensions, particularly in the Middle East, and uncertainties surrounding U.S.-China relations impacted stocks. Oil prices fell due to conflict and demand concerns, which weakened energy stocks, while fears of global instability had minimal impact on broader market sentiment. Defensive sectors like Utilities and Consumer Staples saw slight declines, as much of the recent tensions have already been priced in by the market.
In the past four weeks, equity markets in Thailand, Argentina, and Singapore have performed strong. Thailand's market surged as the new government introduced stimulus measures to boost economic growth, especially in tourism and infrastructure. Argentina's markets rallied on hopes of economic reforms amid signs of political stabilization ahead of the Presidential election. Singapore's market saw gains from strong corporate earnings and renewed confidence in its financial sector, further supported by easing inflation and stable economic conditions.
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Last week, the GICS sector performance was mixed. Technology led the gains, driven by strong earnings from major players, while Energy lagged due to falling oil prices. Consumer Discretionary and Financials saw modest gains, benefiting from positive economic data, while the Utilities and Real Estate sectors underperformed, giving a little back from the month amid rising interest rate concerns. |
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Last week, value stocks outperformed growth stocks as rising interest rates and economic uncertainty favored stable, dividend-paying companies. Core value sectors, Energy and Finance were modestly weak and unchanged, respectively. Conversely, growth sectors such as Technology and Consumer Discretionary, outperformed due to the potential for lower borrowing costs.
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Alpha Picks: Did You Know? |
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Alpha Picks aims to select 'Strong Buy' stocks that, we believe, have the highest probability of capital appreciation based on a proprietary quantitative model. Using a rigorous, data-driven methodology, Alpha Picks' portfolio's total return is +139% vs. the S&P 500's +51% since its launch on July 1, 2022. Two 'Strong Buy' rated stocks are selected monthly; one pick is added on the first trading day of the month, and the other is added on the 15th or the closest trading day thereafter. Alpha Picks Winners: Nine out of 36 Alpha Picks have returned over 100% to the portfolio. In addition, 33 out of 36 Alpha Picks met or beat recent EPS earnings expectations. Alpha Picks' June 17th pick, Sprouts Farmers Market topped expectations for consecutive earnings beats, returning an incredible 37% to the portfolio and is +125% YTD and +160% over the last year. Rising consumer demand for organic foods has paved the way for this top Quant-rated Consumer Staple, offering "defensive" qualities for investors seeking safe-haven investments amid market volatility.
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(as of September 16, 2024) |
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September can be a difficult month for equity markets, as demonstrated by the S&P 500 notching one of its worst four trading days to kick off the month since 2001. Traders often spur the sell-offs as they reassess portfolios and make adjustments for the fourth quarter. Economic events like inflation hysteria, the November U.S. Presidential election, strikes, and geopolitical tensions can amplify seasonal volatility in markets. While historical precedent suggests that September could be an overall down market month, for the first time since 2019, U.S. markets are on track to finish higher. This positive news could indicate that the market slumps linked to the "September Effect" and the seasonal adage, "Sell in May and Go Away", may allow the markets an earlier opportunity to fare better. Historically, the best average monthly returns for the S&P 500 are between November and April of a given year, while May through October tend to deliver lower returns. Should September extend its gains into October, diversification and defensive positioning may help offset seasonal losses with more potential upside into the holiday season. |
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► FOMC lowered rates by half a percentage point (0.5%) in one of the most aggressive tightening campaigns in 40 years. Fed Chair Powell hinted about the rate cuts at the Jackson Hole Economic Symposium. Recent economic data indicates inflation is improving with CPI falling from a peak of 9.1% in June 2022 to 2.5% in August, and a softening labor market offers support for the rate cuts. Fed Chair Jerome Powell signaled he'll likely cut the Fed funds rates by another half percentage point in 2024 and anticipates four additional cuts in 2025 and two in 2026.
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► The inflation backdrop in the U.S. has moderated in recent months, with the consumer price index (CPI) up 2.5% for the 12 months ending in August, down from 2.9% in July and its smallest increase since February 2021. While food, shelter, and energy prices rose, signs of 'moderating inflation' appear to be a positive sign that the Fed is getting closer to its 2% target.
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► U.S. jobs report: The U.S. added 142,000 nonfarm jobs in August, topping June and July's job gains, which experienced significant revisions. The unemployment rate ticked lower by -0.1ppts to 4.2%, and the number of unemployed people was nearly unchanged in August, at 7.1 million. The next Jobs Report will be released on October 4th.
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| Carnival Corporation & plc (CCL)
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| Nike, Inc. (NKE), Paychex, Inc. (PAYX), Cal-Maine Foods, Inc. (CALM) |
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| RPM International Inc. (RPM), Levi Strauss & Co. (LEVI)
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| BlackRock Core Bond Trust (BHK),
BlackRock Virginia Municipal Bond Trust (BHV),
Constellation Brands, Inc. (STZ) |
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| Jobs Report BlackRock Municipal 2030 Target Term (BTT)
Tilray Brands, Inc. (TLRY)
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Alpha Picks Sector Performance |
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Quantitative Ratings and the importance of diversification: Investors crave certainty. However, only three things in life are certain: death, taxes, and market uncertainty. Seeking Alpha's Quant Ratings offer an objective, unemotional evaluation of securities based on hundreds of metrics. Each security is graded using five "factors:" Value, Growth, Profitability, Momentum, and EPS Revisions, then assigned a grade from A+ to F, to comprise an overall Strong Buy, Buy, Hold, Sell, or Strong Sell rating. Diversification can mitigate the risk of relying on any single investment and offers a host of long‐term benefits. The Alpha Picks Team believes that a core reason for Alpha Picks' outperformance is that it's not focused on one specific investing style, such as Value or Growth. We look for the most attractive opportunities in the market by identifying 'Strong Buy' stocks that are collectively attractive on a combination of value, growth, profitability, momentum, and revised forward-looking earnings estimates. |
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Alpha Picks Top Performing Sectors (over 1 month) as of 9/16/24
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Sector diversification can mitigate the risk of relying on any single investment and can offer a host of long‐term benefits.
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*Performance is as of September 26, 2024. Alpha Picks adds two stocks per month - on the closest business day to the 1st & 15th. Alpha Picks removes stocks based on rating thresholds (i.e., when a rating changes to a sell). Performance is calculated and reported daily using time-weighted returns. For more details on the performance calculation and methodology of Alpha Picks, click here.
Past performance is no guarantee of future results. Alpha Picks does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Any content and tools on the platform are offered for information purposes only. Any views or opinions expressed may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker, US investment adviser, or investment bank. |
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https://email-st.seekingalpha.com/oc/629888ce0c4303264f02dffelyluv.1sg19/c186f02b |
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