September 2022 Market Summary
September was another difficult month for stocks and bonds. The Dow Jones Industrial Average tumbled 8.8%, the S&P 500 slumped 9.2%, and the NASDAQ sank 10.4%. Persistent inflation, a strengthening US dollar, growing US Recession risk and another “jumbo” 0.75% rate hike by the Federal Reserve contributed to a dismal end-of-Q3 for stocks.
September marked the single worst month for US equities since March 2020. Year-to-date, the Dow is down 19.7% and flirting with bear market territory, the S&P 500 is off 23.9%, and the NASDAQ is 32% lower.
No sector finished September in the black, and cyclicals were hurt the most for the second straight month. Industrials, communication services, technology and real estate all plummeted over 10% in September. The relative “winner” was the historically rate-proof health care sector, which fell 2.5%.
Oil accelerated its retreat from prices above $100 per barrel. Both WTI and Brent fell over 14%, to $77.17 and $82.55 per barrel, respectively.
In housing, US New Single-Family Home Sales sharply rebounded by 28.8% MoM, though Existing Home Sales slipped for the seventh straight month.
Meanwhile, inflation data was mixed: July’s inflation rate fell slightly to 8.26% but core inflation grew to 6.32%. The manufacturing sector slid further toward contraction territory, with last month’s US ISM Manufacturing PMI falling by two points to 50.9.
The inverted yield curve remained firmly inverted in September as the 3-Year Treasury Note sported the highest rate among US Treasuries. In addition to the 3-Year, yields on the 1-Year, 2-Year, 5-Year and 20-Year instruments were all north of 4%. The long-term 30-Year Bond was sporting the third-lowest yield of all Treasuries as of September 30th. In yield spread news, the widely-followed 10 Year-3 Month Spread grew positive but the 10-2 Year Spread remained inverted by 39 basis points.