The 1-Minute Market Report September 22, 2024

In this brief market report, we look at the various asset classes, sectors, equity categories, exchange-traded funds (ETFs), and stocks that moved the market higher and the market segments that defied the trend by moving lower.

Identifying the pockets of strength and weakness allows us to see the direction of significant money flows and their origin.

The market sets a new record high

The S&P 500 notched its 39th record high on Thursday, reaching 5713. In a typical year, the market makes 14 new highs over the full year. Here's a look at the last 4 weeks.

A look at monthly returns.

This chart shows the monthly returns for the past year. September got off to a shaky start but it is now in the green. Bear in mind that pullbacks of 5% or so are common during bull markets.

A look at the August-September selloff.

Here is a closer look at the recent pullback, using a drawdown chart. The current drawdown is 0.2% from the peak on Thursday.

A look at the bull run since it began last October.

This chart highlights the 59.4% gain in the S&P 500 from the October 2022 low through Friday's close. We have moved above the trendline and it looks like we may have further to run before this rally is over. 

Major asset class performance.

Here is a look at the performance of the major asset classes, sorted by last week's returns. I also included the returns since the October 12, 2022 low for additional context.

The best performer last week was the Asia 50 index. Taiwan Semiconductor makes up 25% of the index, and TSM is struggling to keep up with surging demand. The worst performer was Volatility, as the VIX index first spiked, then fell from its high.

Equity sector performance

For this report I use the expanded sectors as published by Zacks. They use 16 sectors rather than the standard 11. This gives us added granularity as we survey the winners and losers.

Energy, especially energy services, had a good week. Autos also did well.

Equity group performance

For the groups, I separate the stocks in the S&P 1500 Composite Index by shared characteristics like growth, value, size, cyclical, defensive, and domestic vs. foreign.

The best performing group last week was Small Cap Growth. The Mag 7 stocks came in 2nd place, tied with Mid Cap Growth.

The S&P Top 7

Here is a look at the seven mega-cap stocks that have been leading the market over the past year. These seven stocks account for 52% of the total YTD gain in the S&P 500. That's down from 87% at the start of the year, providing evidence that participation in the bull market is broadening. META was the big winner, while NVDA continues to be a source of funds for investors.

The S&P Top 7 dominance is fading

The 10 best performing ETFs from last week

Oil & Gas Equipment and Services led the way higher in ETF land.  

The 10 worst performing ETFs from last week

Cannabis stocks continue to suffer. Some of these companies are paying up to 70% in taxes. It's hard to grow with a headwind like that.

The 10 best performing stocks from last week

Here are the 10 best performing stocks in the S&P 1500 last week.

Constellation Energy (CEG) soared after inking a deal with Microsoft to reopen a shuttered nuclear plant in Pennsylvania. The plan is to use nuclear power to run Microsoft's AI data centers.

The 10 worst performing stocks from last week

Here are the 10 worst performing stocks in the S&P 1500 last week. 

Iteos (ITOS) tested its immuno-oncology drug in patients with high levels of a receptor called TIGIT. Overall, 59% of patients responded to treatment.

Final thoughts

After spending two months in the wilderness (no new highs), we finally set a fresh record on Thursday. Will there be more new highs this year? I think the odds are overwhelming that we will. I stand by my forecast for a soft landing (no recession) and Fed rate cuts continuing after September. We may see more selling in the next few weeks, but the long-term momentum of this market remains strong. 

Investors are worried about several things, but the three things that top the list are 1) high valuations, 2) possible recession, and 3) the slow pace of visible gains from  the AI revolution. But market participation continues to broaden out and there is less dependance on the Mag 7 to lead the way higher. If we do get another bout of selling, make sure your watchlist is up to date and be ready to buy the dip.