Fall colors began to appear in the major markets as the first week of September saw red. All five indices closed the first week of the month with losses exceeding two, three and even five percentage points. 

For the S&P 500, last week’s Labor Day shortened trading week saw a pullback of 4.25 percent and stood as the worst week since March of last year. The pullback in the S&P 500 was especially disappointing given that the index had closed within a fraction of a percentage point of its all-time closing high, coming into September. That said, Friday’s close effectively places the index back to the mid-June level on the index, ignoring the volatility that emerged in the Summer Months. 

For some investors, the age-old adage of “Sell in May and go away,” stands to ring somewhat true this year as we approach the St. Ledgers Day race this Saturday. That said, Seasonality has long been debated with particular impact being given to the years and indices selected. 

In Economic News, the August BLS Employment Report came in weaker than expected with only 142,000 jobs created, short of the 162,000 expected. This combined with downward revisions to the June and July numbers especially weighed on the minds of market participants. 

Participants wondered if the employment numbers would further put pressure on the odds of a cut to the Fed Funds Rate. As of Friday, the expectations still hold the greatest likelihood of an initial 25 basis point cut at the September meeting. However, odds strengthened to show another 50-basis point cut at the November meeting, according to the CME Group’s FedWatch Tool. 

Interest Rates dropped in kind with the yield curve seeing as much as 28-basis points fall off the 1 year duration. This stimulated bonds as a result. The Bloomberg Barclays Aggregate Bond Index added just shy of a percent a quarter last week. 

---

Concerned about inflation? Check out our Tips to Reduce Risks In Case of Recession.

---

The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries. https://us.spindices.com/indices/equity/sp-500 The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities. https://us.spindices.com/indices/equity/dow-jones-industrial-average The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 2,500 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes. https://indexes.nasdaqomx.com/Index/Overview/COMP The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets. The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017, it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country. https://www.msci.com/ The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market. https://us.spindices.com/indices Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®). https://us.spindices.com/indices