💃 Stocks hit new highs

and more economic data is here

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Good morning investors! Fed’s jumbo interest rate cut has put the U.S. on track for a soft landing, according to Goldman CFO as stocks continue to climb.

Today we cover:

  • US consumers are losing confidence

  • A little about commodities – oil and gold

  • Stocks continue to rise

📊 Economy and News 

U.S. Consumer Confidence Plummets, Yet Home Buying Intentions Rise Amid Economic Uncertainty

U.S. consumer confidence experienced its steepest drop in three years this September, driven by growing anxiety over the labor market. Despite these concerns, more households are expressing a desire to purchase homes in the coming six months, indicating a potential shift in consumer priorities.

Rising Inflation and Political Uncertainty

According to The Conference Board's latest survey, consumers are expecting inflation to rise over the next year, further dampening their optimism about the economy. With the upcoming November 5 presidential election, economic factors could play a decisive role in shaping voter behavior.

Consumer Spending Remains Strong in Leisure Activities

In spite of economic worries, Americans are still showing a strong interest in leisure activities such as travel, dining out, and attending movies. These behaviors could help sustain consumer spending and drive continued economic growth, countering some of the negativity in consumer sentiment.

Housing Market Trends Offer a Silver Lining

In the housing sector, single-family home prices in the U.S. edged up by 0.1% in July, following a flat performance in June. The Federal Housing Finance Agency reported a 4.5% increase in home prices over the 12 months ending in July, marking the slowest rise since June 2023. This moderation, combined with improving housing supply and easing mortgage rates, may make homeownership more accessible to prospective buyers.

Meanwhile, JPMorgan Chase CEO Jamie Dimon’s warning about escalating geopolitical instability adds a layer of uncertainty to the future of the U.S. economy. Dimon emphasized that this volatile environment could significantly impact economic conditions moving forward.

Global hits:

Good to know: Pennsylvania health system agrees to $65 million settlement after hackers leaked nude photos of cancer patients.

Equipment borrowing declines: U.S. companies took out 10% less in loans for equipment investments in August compared to the same month last year. Additionally, new loans, leases, and lines of credit signed by businesses in August decreased by 17%, dropping from $11.1 billion the previous month.

However, prospects are looking up as interest rates are expected to decline, which should encourage borrowing moving forward.

Commodity prices: Leading banks are predicting that gold will maintain its record-breaking price surge through 2025. This outlook is driven by renewed strong inflows into exchange-traded funds (ETFs) and anticipated interest rate cuts by major central banks, including the U.S. Federal Reserve.

So far this year, gold has risen by nearly $570 per ounce, or over 27%, making it one of the top-performing assets of 2024. This marks gold's most significant annual increase since 2010. The precious metal hit an all-time high of $2,639.95 per ounce earlier this week and has repeatedly set new records throughout the year.

This makes it a good time to add gold to your IRA.

Meanwhile, OPEC’s 2024 World Oil Outlook presents an optimistic forecast for oil demand growth. However, other market analysts are less confident, pointing to weak global demand projections. Additionally, increasing oil production from non-OPEC nations suggests a prolonged period of subdued crude prices.

Worth checking: FTX fraudster Caroline Ellison sentenced to 2 years in prison, ordered to forfeit $11 billion.

📈 Stocks

S&P 500 5,732.93 (+0.25%)
DJIA 42,208.22 (+0.20%)
NASDAQ 18,074.52 (+0.56%)
BRENT CRUDE 75.55 (+1.15%)
* Prices as of Sep 25th, 12:20 AM UTC

Stocks continue to rise

The S&P 500 reached a fresh high on Tuesday, overcoming a disappointing consumer confidence report. The rally was largely fueled by Nvidia, which surged nearly +4%. This spike followed news that CEO Jensen Huang has paused selling the company’s stock after cashing out more than $700 million under a prearranged plan.

Chinese stocks also had a strong showing, boosted by Beijing’s recent stimulus efforts to ignite economic growth. U.S.-listed shares of Alibaba and JD.com jumped +7.9% and +13.9%, respectively, while industrial giant Caterpillar gained close to +4%.

On the downside, Visa dropped around -4% and Mastercard fell -3% , after the U.S. Justice Department accused Visa of holding a monopoly over debit networks, which it says influences the price of "nearly everything."

The major indices are on track for solid gains this month. The Dow has risen by about 1.6% in September, the S&P 500 is up 1.5%, and the Nasdaq is set for a 2% increase. Investor optimism is partly driven by hopes that anticipated interest rate cuts by the Federal Reserve will fuel economic growth and enhance corporate profits.

Boeing in news again: Boeing announced Monday that it raised its offer to the International Association of Machinists (IAM) union as the strike against the company enters its 11th day.

The new offer would give members a 30% raise over the four-year life of the contract, including an immediate 12% raise, up from the 25% in overall raises and an immediate 11% raise that membership voted almost unanimously against on September 12, just before walking off the job at Boeing plants on the West Coast.

On the other hand, FAA said that Boeing still has to make “significant changes” to improve the quality and safety of its airplanes.

Also check: Microsoft to spend $1.3 billion in Mexico on cloud, AI tech.

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💵 Personal Finance

Prepare your investment for the election season

The US presidential election is next year. The stock market has rallied this year but this could change next year with elections. It’s important to take the right steps to safeguard your investment.

What history says

The benchmark index has averaged a 6.2% gain during the fourth year of presidential elections, going back to President Herbert Hoover's last year in office in 1932.

The period right after Election Day tends to be positive for stocks.

The S&P 500 index has added 5% in the eight weeks following Election Day through the end of the year in the median election year since 1984, compared to a 2.6% gain during the same period during non-election years, according to Goldman Sachs.

Still, stocks could see a milder rally next year. The S&P 500 has gained 6.2% on average during the fourth year of presidential terms since 1932, according to Yardeni Research. That’s below the 13.5% gain the index has averaged during the third year of presidential terms since 1931.

During the first and second years of presidential terms, the S&P 500 has risen 6.7% and 3.3% on average, respectively, according to the same dataset.

But, don’t count solely on historical data, especially because the situation is very different this time.

There are challenges

The global economy is in a crisis. There's war in Ukraine, Israel and Gaza are in conflict, and US relations with China are not good.

Economists fear rising prices and higher inflation next year, which could impact the stock market as well.

The New York Fed, which gauges the risk of recessions by tracking the spread of 3-month and 10-year Treasury yields, estimates that there’s a 56% probability that the US economy will tip into a recession by September 2024.

Should I invest now or after the elections?

This can be tricky to answer because we don’t know where the market is heading. The key lies in being a smart investor and choosing your portfolio carefully. Here are a few tips to remember:

  • Use dollar-cost-averaging to benefit from the situation.

  • Have a diversified portfolio so you can stay safe even if one industry doesn't offer your desired results.

  • Focus on long-term investments and don't let short-term fluctuations worry you.

  • Benefit from the current high interest rate environment and choose high-yield savings accounts to be on the safe side.

  • Get in touch with a financial advisor and get a customized solution according to your financial goals.

The video below might be able to help, so give it a look:

💰 Be a Better Investor

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

Warren Buffett

Resources:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.