Monthly Observations from CIO, Chris Zaccarelli

Markets in Review

The S&P 500 rose 2.0% in September, which increased its year-to-date gains to 20.8%. The MSCI All Country World index also rose during the month, gaining 2.2%, improving its year-to-date return to 17.2%. The Bloomberg BarCap U.S. Aggregate Bond index improved by 1.3% on the month, earning a year-to-date gain of 4.5%

For the second month in a row, the market sold off in the first few days of the month as recession – and election – jitters spooked investors, but a large rate cut by the Federal Reserve and a benign inflation report helped to ease their concerns, allowing markets to return to all-time highs.

Monthly Highlights

• The stock market started off the weakest month of the year with losses
• The Fed cut interest rates by a larger-than-average 50 bps 
• The stock market finished the month at all-time highs as inflation continued to moderate

News in Review

Below are some stories that caught our eye this past month. To learn more, follow the links to the full article.

The S&P 500 Books Back-to-Back Losses with a Rocky Start to September 

The S&P 500 started the month off with losses ahead of the unemployment report, because traders worried that the economy was softening, and weaker economic data and corporate profits were on the horizon. September is typically the worst month of the year and many investors were hesitant to buy stocks because it’s a seasonally weak period.

Fed Cuts Rates by Half-Point in Aggressive Start to Easing Cycle

The Federal Reserve cut interest rates for the first time in over 4 years and began with a 0.5% reduction – twice the normal amount. In making such a large cut, the Fed showed their commitment to bolstering the labor market and shifting their focus away from containing inflation, as they believe they have taken the necessary steps to bring inflation back down to their target. 

S&P Notches Fresh Record Ahead of PCE Data 

What a difference a few weeks makes as the S&P started the month off in a disappointing fashion, but turned around after the Fed cut interest rates in dramatic fashion prior to the end of-month PCE (Personal Consumption Expenditures) report, which is the Federal Reserve’s preferred measure of inflation.

Wreck of French Steamship that Sunk in 1856 Discovered off New England Coast 

A famous steamship that sank before the Civil War was found in 260 feet of water, 200 miles off the coast of Massachusetts. It was an engineering marvel at the time, with an iron hull and a steam engine, which was a relatively new technology, but it sunk after colliding with another ship, taking 114 of the 132 people on board with it. The company that found the wreck (Atlantic Wreck Salvage) will begin the process of retrieving artifacts and anything of value that they can find. 

DISCLOSURES
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This newsletter was written and produced by the Independent Advisor Alliance, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

S&P 500 INDEX: The Standard & Poor's 500 Index is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

NASDAQ 100 INDEX: The Nasdaq 100 Index is an unmanaged, capitalization-weighted index of the largest 100 non-financial stocks traded on the Nasdaq market. Unlike the S&P 500 it does not represent all major industries and may be more volatile than more broadly constructed indices.

MSCI ACWI INDEX: The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries. With 2,495 constituents, the index covers approximately 85% of the global investable equity opportunity set.

Bloomberg U.S. Aggregate Bond Index: The Bloomberg U.S. Aggregate Bond Index is a broad-based index of the U.S. investment-grade, fixed-rate bond market, including both government-related and corporate securities and mortgage-backed and asset-backed securities.

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