Hope you are all doing well. U.S. stock indexes posted some of the steepest weekly declines in more than a year, with the NASDAQ down nearly 6% as of Friday’s close. The S&P 500 fell more than 4%, and the Dow declined almost 3%. Technology stocks were hit particularly hard amid fresh concerns about the short-term profit potential from artificial intelligence. The poor start to September is not shocking as it is historically the worst month for stocks. The Dow has recorded positive returns in September only 41.7% of the time since 1897, while the Nasdaq has finished higher 54.1% of the time since 1971. By comparison on an annual basis the stock market finishes positive over 70 percent of the time. The NFL returns to action this week, I have broken down this week’s update using some of the league’s more infamous moments.
Janet Jackson’s Super Bowl wardrobe malfunction
How you handle the unexpected is important. Market volatility can leave you feeling uncertain as to your next steps with your investments. Stay invested even if it gets worse. The fundamentals still support an ongoing market expansion. Inflation is moderating. The Fed is poised to cut rates. Economic growth is slowing but does not appear likely to turn negative or recessionary. If you have cash on the sidelines, capitalize on the market weakness. l still favor large-cap and mid-cap U.S. stocks. I think mega-cap technology for the longer term still has the most growth potential. Though other areas like utilities and industrials are starting to perform nicely. The non tech sectors could potentially start to do well as we enter a lower interest rate environment.
Rap mogul Suge Knight’s two game career as a replacement player during the 1987 strike
Like Suge and his fellow replacement players, the labor market thought it had jobs that didn’t really exist. We got news of more revisions this week. The jobs number for June and July were revised downward by a combined 86,000 jobs. The government also reported on Friday that the economy added 142,000 jobs in August. The number, if it is accurate, was above the previous month’s gain. Though still it was less than the consensus expectations for around 160,000.
USFL awarded $1 in NFL antitrust lawsuit
Tech investors felt a bit like the USFL this week as semiconductor stocks failed to produce the type of return they were expecting. The bearish price action in the semiconductor sector, followed an earnings beat and guidance raise from chip leader NVIDIA last Wednesday. Despite the positive earnings report from its bellwether, the Semiconductor Index (SOX) was down 12.3% this week alone. The reason the SOX is important to the overall market is because chip stocks have been a market leader over the past two years and are seen as a proxy on AI’s growth story more generally. I, like many, believe in the growth runway for AI along with the potential for productivity gains. AI will contribute meaningfully to corporate earnings growth not just in tech but across all businesses over the next several years.
If you’d like to speak about your investments or your plan, my calendar link is below and you can schedule a phone or zoom appointment.
