Stableford Capital Insights

After a volatile August, the S&P 500 increased 1.3% during September as fears of the global slowdown began to dissipate. The respite may be short lived however, as early October ISM surveys indicate a contraction in the manufacturing side of the economy. The key question from here is whether the contraction will spread from the relatively small manufacturing component (approximately 10%) to the much larger services side of the US economy.

The S&P 500 fell 1.8 % during a volatile August as the Federal Reserve’s -25 basis point move on July 31 proved too hawkish versus expectations. Yields on the 10 Yr US Treasury fell 50 basis points to 1.5% in August as well.

The S&P 500 increased 2.5% in July, but the real fireworks occurred after the Fed meeting July 31 through August 5. During that 4 day period the market was down 5.6%. Fixed Income had similar gyrations, with yields on the US 10 Yr Treasury falling 30 basis points from July 31 to 1.71% on August 5, after holding relatively stable for July