Watch the CPK Market Action Report: September 2023

Rising bond yields fueled a moderate retraction in all of the major indices for the month. Could September offer up a nice rally for equities or will sticky economic data require additional rate hikes from the Fed and push stocks even lower?

Watch the Market Action Report now:

Market Action Report

September 2023


Rising bond yields fueled a moderate retraction in all of the major indices for the month. Could September offer up a nice rally for equities or will sticky economic data require additional rate hikes from the Fed and push stocks even lower?

That action starts now!


Even with a rally in the final days of August, all of the major indices gave up some ground this month. The Dow Jones Industrials closed lower, losing 2.43% and the S&P 500 was down 1.55%. The Nasdaq Composite also lost a little ground closing down 1.68%. 


Stock movement continues to be heavily tied to the 10yr Treasury. As rates go up, equity prices fall and the inverse. For now, the market has clearly embraced the idea that the Fed is done with rate hikes. However, as I write this, we are seeing a slight tick higher in yields after the release of the August jobs report and that is keeping stocks flat for now. It is likely we will continue to see this inverse movement with equities and yields until the Fed has achieved their inflation goals. If we get any indications of a hard landing or rate cut expectations to extend beyond mid-2024, it would be prudent for investors to expect further declines in equity valuations. 


As I indicated last month, bond yields continued their rally for most of August and forced a selloff in equities. In response to a softer than expected JOLTS report, yields did drop sharply at month end allowing equities to rebound slightly. The 5yr settled at 4.24%, the 10yr at 4.09% and the 30yr 4.20%. Regardless, the key for equity markets to move higher remains that yields need to be stable.


WTI Crude was a bit volatile for the month with a quick jump to just over $83.50/bbl only to pull back to just under $79/bbl mid-month before spiking once again to $83.65 where it closed out. It appears that some of that spike was driven by short covering among speculators due in part to Russia’s deputy PM stating that OPEC+ has already agreed to extended output cuts despite the lack of any official meetings recently. 

Oil can continue higher on momentum paired with a lack of speculative short sellers; however, looking out a few quarters, it is hard to imagine oil trading higher than current levels given the deeply inverted yield curve offering a historically accurate warning of a recession looming somewhere over the economic horizon.

Copper slipped lower to $3.78/oz. Copper has been range bound all summer and I continue to watch for a breakout either way as a macroeconomic signal in favor of, or against, soft landing expectations.

September Gold was able to rebound by month end after a dip of just over 3% mid-month to close out at $1940.80/oz. Gold is moving towards the upper end of its multi-month trading range, which has been capped by resistance at $2,000/oz. For that to continue, we will need to see perfect Goldilocks economic data come through to support the case for a soft landing.


Strong economic data throughout the month helped bolster a rally in the US Dollar. The greenback briefly touched 104 before pulling back slightly and closing out just above its recent top range at 103.58. The dollar will most likely remain at this level or higher until we see growth falter or inflation fall further. 


All things considered, recent economic data indicates we are likely to see the Fed maintain their aggressive, hawkish policy stance as we have not seen a definitive and broad-based cooling in the labor market yet and inflation pressures remain uncomfortably elevated. That is not priced into markets here with the S&P 500 back above 4,500. So, any new hawkish Fed chatter, or “hot” economic data could reignite volatility.


The slight pullback we saw in August was not unexpected. August and September are notably two of the worst months for equity performance. However, it allowed several outperforming stocks to somewhat recalibrate to more reasonable valuations and PE ratios, reducing the overbought level of the markets and opening the door for some investors to initiate a position in some of those stocks. 

Now, if the economy starts slow as many think it will in the coming months, that doesn’t necessarily mean the markets have to sell off. In fact, a slowing economy would most likely force the Fed to start cutting rates which would ultimately stimulate the equity markets. Of course, there are many forces to consider before one should jump in with both feet. However, markets always move in advance of where the economy is headed. So, if equity markets suffered their pullback in 2022, it’s possible that equities might be at the start of a new bull market with an economy that’s not that far behind.   


For the month of September, the cash allocation in our equity models remains at 40% due to the model’s more aggressive nature.

Our broad focus is on Domestic and International Equities.

As for Domestic Equities, our focus is on Mid Cap Blend and Mid Cap Value and Large Cap Growth with an emphasis in the Technology, Industrial, Basic Material, Non-Consumer Cyclical and Consumer Cyclical sectors. 

In International Equities, our focus is on Europe Emerging, Latin America and Europe Developed.


As a reminder, my current allocation is not a recommendation. Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISKS, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.

If you don’t have a plan OR you’re not comfortable with the plan you have, call me today to get pointed in the right direction.

I’m Chad Kunc and that puts a wrap on the September 2023 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.

And that action starts, NOW!