The 1-Minute Market Report – September 8, 2024

The 1-Minute Market Report – September 8, 2024

In this brief market report, we look at the various asset classes, sectors, equity categories, exchange-traded funds (ETFs), and stocks that moved the market higher and the market segments that defied the trend by moving lower.

Identifying the pockets of strength and weakness allows us to see the direction of significant money flows and their origin.

The rebound reverses course

The S&P 500 took a serious hit at the start of September. The proximate cause for the selloff was the weak jobs report which rekindled fears of recession. The rally over the prior three weeks brought us back to within 0.3% of the all-time high. Here’s a look at the last 4 weeks.

A look at monthly returns

This chart shows the monthly returns for the past year. August got off to a shaky start but has finished solidly in the green. Bear in mind that pullbacks of 5% or so are common during bull markets.

A look at the July-August selloff

Here is a closer look at the September decline, using a drawdown chart. The maximum drawdown so far was 8.5% from the peak on July 16.

A look at the bull run since it began last October

This chart highlights the 51.2% gain in the S&P 500 from the October 2022 low through Friday’s close. We have dipped below the trendline, and it looks like we may be headed for another volatile couple of weeks.

Major asset class performance

Here is a look at the performance of the major asset classes, sorted by last week’s returns. I also included the returns since the October 12, 2022 low for additional context.

Volatility is up, and bonds made small gains. The rest of the asset classes I track were in the red. The worst performer was Blockchain. Bitcoin topped out at $71,000 on June 4th and has since fallen to $54,456.

Equity sector performance

For this report, I use the expanded sectors as published by Zacks. They use 16 sectors rather than the standard 11. This gives us added granularity as we survey the winners and losers.

The only sector that provided shelter from the storm was Consumer Staples. Technology and Energy had big declines.

Equity group performance

For the groups, I separate the stocks in the S&P 1500 Composite Index by shared characteristics like growth, value, size, cyclical, defensive, and domestic vs. foreign.

The top group was Defensive stocks like Consumer Staples and Utilities as investors continued to rotate out of Tech and Small Caps.

The S&P Mag 7

Here is a look at the seven mega-cap stocks that have been leading the market over the past year. These seven stocks account for 51% of the total YTD gain in the S&P 500. That’s down from 87% at the start of the year, providing evidence that participation in the bull market is broadening. Tesla (TSLA) held up the best while Nvidia (NVDA) struggled.

The S&P Top 7 dominance is fading

The 10 best-performing ETFs from last week

Cannabis stocks finally caught a bid. Treasury Bonds and the Euro saw small gains.

The 10 worst-performing ETFs from last week

Bitcoin had another rough week. Semiconductors were down 11.7%, following Nvidia’s lead. Copper and Uranium miners were down, reflecting worries about economic growth.

The 10 best-performing stocks from last week

Here are the 10 best-performing stocks in the S&P 1500 last week. Emergent

Shares of Frontier Communications (FYBR) rocketed higher as Verizon plans to acquire the company in a $20B deal.

The 10 worst-performing stocks from last week

Here are the 10 worst-performing stocks in the S&P 1500 last week.

SunPower (OTC:SPWRQ) is circling the drain.

Final thoughts

True to form, the market headed south for the first week of September. All four days of the holiday-shortened week were down. Friday’s weaker than expected jobs report added fuel to the selling frenzy, especially for the Tech sector, which was down a whopping 7.1% for the week. The Mag 7 stocks gave up 5.5% and small caps matched that decline.

When will this selling stop? It’s anybody’s guess, of course, but I think we’re closer to the end than most strategists are saying. The problem, as I see it, is that investors are worried about a recession and many believe that the Fed has overplayed its hand by waiting too long to cut rates.

The other problem is that investors have become impatient about the delayed arrival of the big payoff from the massive AI infrastructure buildout. Looking at industry group performance, semiconductors are among the hardest hit, including Nvidia, which is now in a bear market. I have a full position in Nvidia and I wish I could buy more at these prices.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.