September Slide

October 9, 2023

September began with many indices trending downward, and this continued into the end of the month. On the 20th, the Federal Open Market Committee (FOMC) released their decision to hold interest rates rather than hike them.1 This was its second decision to hold rates since January 2022, the last decision to do so being in June. Following this announcement, there was further downturn in the market but it’s difficult to attribute this market deterioration solely to this decision by the Fed.

Outside of a few moments when the market seemed to rally, September saw a nearly uninterrupted downward trend. The NASDAQ Composite Index tracked the tech-heavy index turning downward by 5.75% and the S&P 500 dipped by 4.94%. Gold, as tracked by the Philadelphia Gold and Silver Index (XAU), ended down 8.21% and the US Aggregate Total Return Bond Index fell 2.08%. Emerging Markets, as observed by the MSCI Emerging Markets Index, also performed poorly, ending down 3.14% for the extended period. The downward trends in fixed income sectors and gold can be associated with the still high inflation and still high interest rates. The negative returns from all indices are signs of deterioration overall but it can be difficult to determine the reason for this recent market decline. 

A review of the data from 1950-present shows the market typically presents negative returns around this time of year. This data makes it hard to say if our economy is truly beginning to deteriorate or if this phenomenon of poor returns is, at least for this current cycle, a result of  lingering effects from our environment of still-high inflation and continual hikes in interest rates over the last year or two. In June, one year ago, the inflation rate had just peaked at 9%, a height not seen for four decades. We believe this staggering inflation is the reason that the Fed has continued to raise interest rates for the last year and a half, bringing that 9% down to a low of 3% in June of this year. Unfortunately, we have moved up from that low to a rate of 3.7% , calculated as of September 13th. This, compiled with the data from previous years, likely means that the negative month we had in September could be attributed to seasonal market behavior rather than an indicator of overall market degradation.

September started the month on rocky footing, and it led into October in the same manner. Inflation has comedown some but not to the 2% mark that we’re looking for. The FOMC has a meeting scheduled for later this month and many investors believe that they will choose o hold rates once more. This seems reasonable, especially considering that they penciled in one more rate hike for the year in their recent meeting. However, they only have two meetings scheduled for the rest of the calendar year which means that, either way, we will know what they decide on Wednesday, November 1st.


Hazel Allen
OPS Analyst


The Federal Open Market Committee is a committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.

The S&P500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.

The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.

The PHLX Gold/Silver Sector Index (XAU) is a capitalization-weighted index composed of companies involved in the gold or silver mining industry.

The Bloomberg US Aggregate Bond Index is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

The MSCI Emerging Markets Index consists of 23 economies including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. The MSCI is a float-adjusted market capitalization index.

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