Weekly: Sept Extends Relentless Decline, Facing a "Spiral Sell-off"?

Although losses weren’t as steep as those in the previous two weeks, the major U.S. stock indexes fell nearly 3%, declining for the sixth time in the past 7 weeks. The $DJIA(.DJI)$ on Monday joined the $S&P 500(.SPX)$ and the $NASDAQ(.IXIC)$ in bear market territory, as the Dow declined more than 20% from its level of early January. 

The stock market’s late summer downturn extended into September and the major U.S. indexes fell for the third quarter in a row. The $S&P 500(.SPX)$ and the $DJIA(.DJI)$ both posted monthly declines of around 9% and the$NASDAQ(.IXIC)$ dropped more than 10%—all steeper than the prior month’s losses.

As of last Friday, $Straits Times Index(STI.SI)$ lost 3%weekly, -2.84% in september, stay 0.9% positive return in Q3 and a slight -1.14% YTD; and $S&P/ASX 200(XJO.AU)$‘s YTD performances are-13.08%, while lost 7.34% in september. 

Compared with the high in January at the beginning of 2022, the total market value of S&P 500 has evaporated by about $10 trillion. Faced with this round of tragic selling tide, the bulls of US stocks are falling into a desperate moment.

The US stock market suffered the worst September since 2002, and has fallen for three consecutive quarters. Michael Hartnett, known as the most accurate analyst of Wall Street and from Bank of America, said in the latest report that the NYSE Composite Index, the "best barometer of Wall Street", was collapsing and the US stock market would fall into a "spiral sell-off".

Recommend to Read: Tumbled $10 trillion! A desperate Moment? Another Black Swan May Approach

Macro Factors to Watch 

PCE Inflation Rises: Despite the U.S. Federal Reserve’s efforts to contain inflation, a monthly inflation metric that the Fed uses as its preferred gauge of price trends rose more than expected. Excluding volatile food and energy, consumer prices rose 4.9% in August from a year earlier, up from 4.7% the previous month as measured by the personal consumption expenditures price index. 

Shrinking Q3 Expectations: Amid a challenging economic backdrop, analysts have scaled back their forecasts for the Q3 earnings results that are scheduled to begin coming out in mid-October. As of the end of September, analysts had reduced their consensus earnings forecast for the $S&P 500(.SPX)$ by 6.6% relative to what they had expected three months earlier, according to FactSet.  

Rough & Tumble Bond Market: The yield of the 10-year U.S. Treasury bond rose modestly in what was otherwise an unusually volatile week in the bond market. The yield surged as high as 3.99% on Tuesday to the highest level in 14 years. The next day, it tumbled to 3.71% before ending Friday’s trading at around 3.80%.

Sectors & Stocks Performances Review

In terms of the sectors' weekly performance, the energy sector and the basic material sector remained positive return, rising 1.86% and 0.92% respectively. Utilities, Real Estate and technology are the top three sectors of decline.

For individual stocks, $Apple(AAPL)$ fell 8,13%, $Alphabet(GOOG)$ fell 3.04%, $Tesla Motors(TSLA)$ fell 3.66% and $Microsoft(MSFT)$ fell 2.11%.

In terms of monthly performance, sectors fell across the board. Real Estate, Technology, Communication Services, Utilities, Industrial, Consumer Cyclical fell by more than 10%. $Apple(AAPL)$, $Microsoft(MSFT)$ , $Alphabet(GOOG)$ , $Amazon.com(AMZN)$ , $NVIDIA Corp(NVDA)$ , $Broadcom(AVGO)$ ,$MasterCard(MA)$ fell more than 10%.

In Q3, only Communication Services and Real Estate sector declined by more than 13%. Energy sector and Consumer Cyclical fell the least, with i1.56% and -3.03% respectively

Weekly & Monthly Top Gainers of S&P 500

$Biogen(BIIB)$ ,$Marathon(MPC)$ ,$Valero(VLO)$ , $Phillips 66(PSX)$ ,$Las Vegas Sands(LVS)$ ,$Wynn(WYNN)$ ,$Twitter(TWTR)$ , $Charles River Laboratories(CRL)$ , $Occidental(OXY)$ , $Diamondback(FANG)$ .$Biogen(BIIB)$, $Regeneron Pharmaceuticals(REGN)$ ,$Twitter(TWTR)$ , $Wayfair(W)$ ,$Eli Lilly and(LLY)$ , $Albemarle(ALB)$ , $Bristol-Myers Squibb(BMY)$ , $Newmont Mining(NEM)$ , $Marathon(MPC)$ , $Allstate(ALL)$ .

Other Markets

Global General Decline in Q3: According to Wind data, in the first three quarters of 2022, the Russian RTS index fell by 33.84%, leading the decline in major global stock markets. South Korea Composite Index, Shenzhen Composite Index, Hang Seng Index, Taiwan Weighted Index, S&P 500, Germany DAX and other indexes fell by more than 20%. The core US comprehensive bond ETF of iShares, which tracks investment grade bonds, fell by about 5% in the third quarter, with a drop of 15% year to date, or the worst year since 2004.

Bulk commodities recorded the largest quarterly decline in two years: oil prices $Micro WTI Crude Oil - main 2211(MCLmain)$ are moving towards their first decline in more than two years. WTI intermediate crude oil futures fell by about 17% in Q3, while gold fell by more than 7% in the third quarter.US natural gas future surged 23.97% due to the postponement of the Ukraine war, the blockage of supply chain, Fed’s interest rate hike and other risks, while oil futures fell into a disaster area.

U.K.'s Fragile Economy: A plan by the United Kingdom’s new government to implement tax cuts and spending increases funded by borrowing triggered further weakness for Britain’s currency. It also prompted a swift response from the U.K.’s central bank, which tried to stabilize credit markets by launching a bond-buying program

Surging Euro Inflation: Rising energy costs fueled another spike in European inflation, with the eurozone reporting that its key inflation gauge rose at an annual 10.0% rate in September, up from 9.1% the previous month. Separately, Germany reported an even steeper increase, with inflation climbing to 10.9% from 8.8% the previous month.  

The Week Ahead: October 3-7

A monthly U.S. labor market update due out on Friday will show whether the strong—but moderating—jobs growth recorded in recent months extended into September. In August, the economy generated 315,000 new jobs—down from 526,000 in July—while the unemployment rate rose to 3.7% from 3.5%. 

Monday

• Institute for Supply Management’s manufacturing index
• Construction spending, U.S. Census Bureau

Tuesday

• Factory orders, U.S. Census Bureau
• Job Openings and Labor Turnover Survey, U.S. Bureau of Labor Statistics

Wednesday

• ADP National Employment Report, ADP
• Institute for Supply Management’s nonmanufacturing index 
• Trade balance, U.S. Census Bureau 

Thursday

• Weekly  unemployment claims, U.S. Department of Labor 

Friday

• Jobs and unemployment, U.S. Bureau of Labor Statistics
• Wholesale inventories, U.S. Census Bureau
• Consumer credit, U.S. Federal Reserve

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