Last Week’s Volatility Carries Over to the New Week…..

U.S. equities were mixed, with the volatility that plagued the markets last week carrying over to the final week of an erratic September. Investors continue to fret over the lingering Chinese real estate issues, growing expectations that global monetary policies are on the path of tightening, and festering supply chain problems, while an end-of-the week debt ceiling deadline has been added to the mix. Value/cyclical sectors—Financials, Energy and Materials—provided the muscle to the upside, while the Information Technology sector was the drag on the markets for the day. Treasury yields added to a recent rally, as bond prices fell, and the U.S. dollar saw a modest rise. Gold finished lower in choppy trading and crude oil prices gained ground. Equity news was light, but M&A activity was in focus, as MGM Resorts agreed to acquire Blackstone’s operations of The Cosmopolitan of Las Vegas for $1.625 billion, while Kraton Corporation agreed to be taken over by DL Chemical Co. Ltd. in a transaction value at about $2.5 billion. A heavy economic week kicked off with durable goods orders rising for a sixth-straight month, though Dallas manufacturing growth slowed more than expected. Europe finished mostly higher amid gains for the value/cyclical sectors, while markets in Asia also diverged as China’s debt concerns remained in focus.

The Dow Jones Industrial Average rose 71 points (0.2%) to 34,869, while the S&P 500 Index lost 12 points (0.3%) to 4,443, and the Nasdaq Composite declined 78 points (0.5%) to 14,970. In moderate volume, 898 million shares were traded on the NYSE and 4.5 billion shares changed hands on the Nasdaq. WTI crude oil rose $1.47 to $75.45 per barrel. Elsewhere, the gold spot price fell $1.30 to $1,750.40 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.1% higher to 93.40.

August preliminary durable goods orders grew 1.8% month-over-month (m/m), versus the Bloomberg estimate of a 0.7% gain and compared to July’s upwardly-revised 0.5% gain from an initial 0.1% dip. Ex-transportation, orders were up 0.2% m/m, below forecasts of a 0.5% gain and compared to July’s unadjusted 0.8% rise. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, increased 0.5%, compared to projections of a 0.4% rise, and above the prior month’s upwardly-revised 0.3% increase.

The September Dallas Fed Manufacturing Index unexpectedly fell but remained in expansion territory (a reading above zero). The index dropped to 4.6 from 9.0 in August and compared to forecasts calling for a rise to 11.0.

Treasuries were lower after yields moved noticeably higher last week following the Fed’s monetary policy decision, as the yields on the 2-year note and the 30-year bond advanced 1 basis point (bp) to 0.28% and 2.00%, respectively, while the yield on the 10-year note gained 3 bps to 1.48%.

©2021 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.