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“The sea is dangerous and its storms terrible, but these obstacles have never been sufficient reason to remain ashore.” – Ferdinand Magellan

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

To catch a segment of yesterday’s interview on CNBC, click on the image below.

The trend of weakness in September looks likely to continue this morning as equity futures are lower and the 10-year yield falls to 3.7%, the lowest level since June 2023. Nasdaq futures are leading the decline this morning following earnings from Broadcom (AVGO) which is down over 7% after a lackluster report after the close yesterday.

The only economic report on the calendar today was Non-Farm Payrolls at 8:30, and traders were anticipating it for signs of whether or not the weakness in the economy is a precursor to something worse or just a soft spot. Unfortunately for the optimists, the headline reading came in weaker than expected as Non-Farm Payrolls rose by 142K versus forecasts for an increase of 165K.  Last month’s report was also revised lower.  Besides that, average hourly earnings rose more than expected, but the unemployment report (4.2%), average weekly hours (34.3), and the labor force participation rate (62.7%) were all right in line with forecasts.  Not a terrible report, but not a strong one either.

Markets have seen a stormy September as the S&P 500 has declined 2.7% month to date. That ranks as the worst 3-day start to September since 2011 (-4.40%), but for all months, August’s 6.08% decline was more than twice as deep.  For all months since 2000, just 26 out of 297 months (8.8%) have seen declines of 2.5%+ in the first three trading days of the month, so the fact that we’ve seen back-to-back months of 2.5%+ to kick off a month is not common, and the last time it happened was in September and October 2008.

The Nasdaq finds itself in a similar situation to the S&P 500. With that index down 3.3% in the first three trading days of the month, it also ranks as the worst first three days of September since 2011, but again for all months, August’s 7.95% decline was more than twice as week.  Unlike the S&P 500, 2.5%+ declines in the first three trading days of a month are much more common.  Since 2000, 15.4% (46) of all months have seen declines of this magnitude, and to find a period where there were 2.5%+ declines in back-to-back months, you only have to go as far back as early 2022.

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