September Charts: Stocks Defy Seasonal Weakness, Tech Led The Charge

U.S. equities, led by the Nasdaq 100's 5% gain and the S&P 500's 3% rally, extended their streak to a fifth consecutive monthly advance in September, defying seasonal weakness. Gold also surged 10% to a record monthly close, while oil underperformed. Despite mixed economic signals, including stalled labor growth and above-target inflation, robust consumer spending and GDP, alongside strong large-cap earnings, are poised to sustain equity market momentum into Q4 amid ongoing macro uncertainty.

Analysis

U.S. equity markets demonstrated significant strength in September, defying seasonal weakness with the S&P 500 advancing 3% for its fifth consecutive monthly gain and the tech-heavy Nasdaq 100 outperforming with a 5% return. This rally was broad-based, with global equities and emerging markets also posting solid returns. In commodities, a notable divergence occurred as gold surged 10% to a record monthly close, while oil lagged. The market's upward momentum persists despite a mixed U.S. economic backdrop characterized by stalled labor market growth and inflation remaining above target. Counterbalancing these concerns are robust consumer spending and GDP growth, which, combined with strong large-cap earnings, are providing fundamental support for the market. The prevailing sentiment is that strong corporate performance is currently outweighing macroeconomic uncertainties, setting a positive tone for continued momentum into the fourth quarter.

Key Decisions for Investors

• Given the sustained momentum and strong large-cap earnings outlook, investors could consider maintaining exposure to U.S. large-cap and technology-focused equities like SPY and QQQ heading into the fourth quarter.
• The surge in gold to a record close alongside equity gains suggests investors are simultaneously seeking growth and hedging risk; it may be prudent to evaluate allocations to safe-haven assets as a hedge against inflation and economic uncertainty.
• Closely monitor upcoming inflation and labor market data, as any significant deterioration in these indicators could undermine the robust consumer spending narrative and challenge the current bullish market sentiment.