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Weekly Market Recap | 9/05/23

What happened last week

  • It was a recovery week for equities as yield moves continued to dictate price action.
  • Labor market data was good news for inflation and helped market sentiment last week.
  • Crude oil rallied above $85 per barrel, its highest level since last November.

What we’re watching this week

  • It is a short trading week without any significant market catalysts.
  • The highlights are ISM Services on Wednesday and a key Fed speaker on Thursday.
  • Bond price action is in focus after a choppy and confusing few weeks.

Horizon’s Investment Management Views

  • After a few rocky August weeks of illiquid trading, equities found their footing last week and finished off the last gasp of summer trading firmly in the green. Falling interest rates were undoubtedly a tailwind as bond price action continued to set the tone for equity markets. Higher beta parts of the US market, including small caps and the tech-heavy NASDAQ 100, led within the US, while international stocks lagged slightly as the dollar edged toward the top end of this year’s trading range. Another notable mover was crude oil, which rallied over 7% last week and settled Friday at its highest level since last November.
  • Last week’s releases of major labor market data painted a favorable picture for the Fed’s quest to stamp out inflation once and for all.  Job growth is slowing, labor supply is increasing, and labor demand is cooling, all positives for a healthier labor market and a better balance to the inflation picture. However, long-term bond yields actually ended higher last week while shorter-term yields fell precipitously. This confusing price action shows that bond yields have two-way risk as fully staffed trading desks reengage after the summer lull.  
  • The shortened trading week ahead is devoid of major market catalysts. The likely highlights are Wednesday’s ISM Services report and a speech from John Williams on Thursday, an influential member of the Fed’s leadership. We will pay more attention to positioning and flow data as investors hunt for the next shift in market narrative; we wouldn’t be surprised to see continued volatility in equities, especially given that September is historically the worst month for stocks.

The Nasdaq 100 Index is a basket of the 100 largest, most actively traded companies listed on the Nasdaq stock exchange. Global stocks are represented by the MSCI ACWI Index, which is a stock index designed to track broad global equity-market performance. Small Cap stocks are represented by the S&P 600, which covers roughly the small-cap range of American stocks, using a capitalization-weighted index. The commentary in this report is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here are not investment recommendations, but rather opinions that reflect the judgment of Horizon as of the date of the report and are subject to change without notice. Forward looking statements cannot be guaranteed. We do not intend and will not endeavor to provide notice if and when our opinions or actions change. This document does not constitute an offer to sell or a solicitation of an offer to buy any security or product and may not be relied upon in connection with the purchase or sale of any security or device. Before investing, an investor should consider his or her investment goals and risk comfort levels and consult with his or her investment adviser and tax professional. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. It is not possible to invest directly in an index. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC.

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