US markets managed to eke out gains despite slightly hawkish commentary from Federal Reserve Chair Jerome Powell, thereby registering their first positive month of September since 2019.
The Dow Jones ended just above the flatline, S&P 500 rose 0.4% to a record high, as did the Nasdaq Composite, with gains of 0.4%. Benchmark indices had begun the month on a wobbly note, considering the seasonality factor, but rallied in anticipation of the Fed cutting interest rates and post the 50 basis points cut as well.
Despite weakness earlier in the day, the S&P 500 secured its fourth-consecutive quarter of gains — the longest such winning stretch since 2021. The tech-heavy Nasdaq 100 notched a similar run.
Fed Chair Jerome Powell said that more interest rate decreases could be forthcoming but the world’s largest central bank does not have a pre-determined path.
“This is not a committee that feels like it’s in a hurry to cut rates quickly,” Powell said.
The S&P 500 closed the third quarter with a more than $2.5 trillion rally, shrugging off the central banker’s cautious stance.
“The bull market has survived the year’s historically weakest quarter, the third quarter, and it is likely to remain intact through at least the end of the year, as earnings remain strong, interest rates are moving lower and consumers are still spending,” said Emily Bowersock Hill at Bowersock Capital Partners.
“We expect the fourth quarter to be quite similar to the third quarter – elevated volatility, but with a strong finish,” she added.
Meanwhile, the world’s biggest bond market pared a historic gain after Powell’s comments. Treasury yields were higher, led by the policy-sensitive two-year note which traded around 3.64% after Powell said the US didn’t have the data yet to make a call on the November meeting.
Still, Treasury debt returned 1.4% this month this month through Friday, as measured by the Bloomberg US Treasury Total Return Index. If the advance holds it will be the market’s longest streak of monthly gains since 2010.
European stocks dropped some 1% after Jeep maker Stellantis NV cut its profit margin forecast. On Friday, Volkswagen AG had issued its second profit warning in three months. Ford Motor Co. and General Motors Co. slumped in US trading.
That was in contrast to the mood in China, where the CSI 300 Index jumped as much as 9.1%, the most since 2008, fueled by the stimulus package.
(With Inputs From Agencies.)