THE WELL-TH NOTES

By 213 Strategic Partners on September 9, 2024

Weekly data-driven insights on the markets and economy

First Week of September 2024

September Off to a Choppy Start
September kicked off the month in negative fashion with the S&P sinking 2.1%, the Dow losing 626 points and the Nasdaq in the red to a tune of 3.3%. With September being a historically poor month for returns, some seasonality may be playing a role in the volatility. The S&P 500 has declined in September each of the last four years, and 7 of the last 10.[i]

Labor Data Fuels Cut Bets. Bets are growing that the Fed may need to cut by 50 basis points at the next Fed meeting in September. Economists and money managers across Wall Street have been scouring recent data for other signs of weakness on top of last month’s disappointing jobs numbers. This week’s data includes the all-important August unemployment numbers due out Friday morning, with the median expectation to be 161,000 new jobs added for the month.[ii]

$3 Gas on the Horizon? Labor Day travel demand barely made a hiccup in the downward trend of gas prices, where Wednesday’s price of $3.32 average a gallon sat at near six-month lows, according to AAA. Nine states already sit below the $3 per gallon threshold, with expectations that half of the country will likely touch that price by the end of September. Demand for fuel last week sat below last year’s level, and the quiet-so-far hurricane season has led to further decline in prices.[iii]

Housing Inflation Likely to Ease. The Federal Reserve Bank of San Francisco sees the gap between housing supply and demand narrowing in the coming year, according to its latest research. That decline is likely to add to downward pressure on inflation. Recent months do show that housing inflation has come down, but remains well above pre-pandemic levels, and continues to account for a large share of overall inflation.[iv]

Dollar General and Dollar Tree Stumble. “Financially constrained” customers are to blame, according to Dollar General, for its cut in outlook causing shares to crater 25%. Competitor Dollar Tree fell in sympathy by over 9%. Dollar General, which has stores that cater to mostly rural areas, tumbled after same-store sales expectations for the coming year were to be up only 1.0%-1.6%. “Softer sales trends are partially attributed to a core customer who feel financially constrained,” said CEO Todd Vasos.[v]

Crypto Prices Plunge Over Heavy ETF Outflows. More than $287 million in outflows hit the 11 US-listed crypto ETFs on Tuesday, the biggest outflow since May 1 of this year. Fidelity led all redemptions with more than $162 million shares of its FBTC fund. Following a blockbuster debut for crypto that broke records for the ETF market, much of that initial enthusiasm has dissipated in the last few months. Bitcoin itself peaked at $73,000 in March and has recently slid to around $58,000.[vi]

[i] “Stocks rebound from early morning slump a day after Wall Street’s worst performance in a month,” CBS NEWS, September 4, 2024, https://www.cbsnews.com/news/stocks-up-nvidia-weak-tech-september-04-2024/. Accessed September 4, 2024.

[ii] Xie, Ye and Liz Capo McCormick, “US. Yield Curve Disinverts as Soft Labor Data Fuels Fed Cut Bets,” Yahoo!Finance, September 4, 2024, https://finance.yahoo.com/news/us-yield-curve-disinverts-soft-143250620.html. Accessed September 4, 2024.

[iii] Ferré, Ines, “Gas prices could drop to $3 by year-end, analyst says,” Yahoo!Finance, September 4, 2024, https://finance.yahoo.com/news/gas-prices-could-drop-to-3-by-year-end-analyst-says-151842792.html. Acessed September 4, 2024.

[iv] Saphir, Ann, “US housing inflation likely to fall in year ahead, Fed paper says,” Yahoo!Finance, September 3, 2024, https://finance.yahoo.com/news/us-housing-inflation-likely-fall-170323104.html. Accessed September 4, 2024.

[v] Li, Yun, “Dollar General shares crater 25% as retailer cuts outlook, blaming ‘financially constrained’ customers,” NBC NEWS, August 29, 2024, https://www.nbcnews.com/business/markets/dollar-general-shares-crater-25-retailer-cuts-outlook-blaming-financia-rcna168770. Accessed September 4, 2024.

[vi] Sigalos, MacKenzie, “Bitcoin ETFs saw heaviest outflows in four months on Tuesday as crypto prices plunged,” CNBC, September 4, 2024, https://www.cnbc.com/2024/09/04/bitcoin-etfs-saw-heaviest-outflows-in-four-months-as-crypto-plunged.html. Accessed September 4, 2024.