The markets just had a month that went against expectations – NBC 7 San Diego

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What you need to know today

A winning month and quarter
US markets rose on Monday, ending a winning month and quarter. Tesla surged 22.2% in September in anticipation of a robot event. The pan-European Stoxx 600 index fell 0.98%, ending September down 0.33%. Automotive stocks fell 4%. Milan-listed Stellantis shares fell 14.7% after the carmaker lowered its 2024 forecasts.

“Not on any predetermined course.”
U.S. Federal Reserve Chairman Jerome Powell gave a speech to the National Association of Business Economics on Monday, saying the central bank is “not on any predetermined course” to cut interest rates. In response to a question, Powell also said the Fed would likely cut interest rates by an additional half a percentage point by the end of 2024 “if the economy performs as expected.”

Nvidia’s IPO competitor files
Artificial intelligence chipmaker Cerebras Systems filed for an initial public offering on the Nasdaq Stock Exchange on Monday. The startup claims on its website that its chips have more cores and memory than Nvidia’s H100, favored by the industry for running AI models. In its filing, Cerebras reported a net loss of $127.2 million on revenue of $78.7 million for 2023.

Markets anticipate a measured response from Iran
Israel has stepped up fighting against the Lebanese militant group Hezbollah, hitting Iran’s proxy network in the Middle East. However, markets seem to think Iran will show restraint in its response. Oil prices did not react at all this week.

(PRO) Is everything going well?
The S&P 500 Index has gained 20.8% so far this year. U.S. interest rates are lower after two years of remaining high while inflation falls. Beijing announced surprise stimulus measures, which bodes well for the global economy. Everything seems to be going well. CNBC Pro’s Michael Santoli examines whether this “right” scenario could come true.

The most important thing

Over the past four Septembers, the S&P 500 has fallen at least 4%. This year, however, the index charted a new trajectory to cap off a winning month and quarter.

On Monday, the S&P rose 0.42% to close at a record high of 5,762.48. The Dow Jones Industrial Average was near flatline and the Nasdaq Composite rose 0.38%.

That puts the S&P up about 2% for the month, marking its first positive September since 2019. For the month, the Dow gained 1.9% and the Nasdaq rose 2.7%.

All indices also recorded quarterly gains, despite the sell-off in early August.

Notably, the Russell 2000 Index, made up of the 2,000 smallest companies included in the Russell Index, gained 8.9% this quarter. That outpaced the quarterly gains of the S&P, Dow and Nasdaq, which rose 5.5%, 8.2% and 2.6%, respectively.

Small-cap stocks tend to benefit from lower interest rates because they are more exposed to overall economic conditions, such as the cost of debt and consumer sentiment. The Russell 2000’s performance outperforming the major indexes can be seen as a sign that the Fed’s recent interest rate cut is starting to have an impact on markets.

This quarter’s S&P sector performance is another indication of how the rate cut is changing investor behavior. Although information technology and communications services were the best performers year to date, they lagged in the most recent quarter, gaining only about 1.4%.

In contrast, utilities grew 18.5% and real estate grew 16.3% in the quarter. Both sectors generally provide investors with dividends that become more attractive as fixed income yields decline coupled with lower rates. Cheaper borrowing costs also have a disproportionate impact on utilities and real estate, as these sectors require huge upfront investments.

With Powell saying monetary policy “will move toward a more neutral stance over time,” the market rally could deepen further as interest rates continue to be cut.

– CNBC’s Robert Hum, Lisa Kailai Han, Alex Harring and Hakyung Kim contributed to this story.