Equity Overview

Volatility subsided in September, as only 2 of 20 trading days saw gains or losses above 1%.

Reversing the recent trend, small mid, and large cap value stocks were up substantially and significantly outperformed growth stocks which were down for the month.

Among the sectors, financials had the best gains and healthcare stocks had the worst losses.

Macro Overview

Economic data reported in September were mixed.  Retail sales were strong and housing showed signs of rebounding.  But there were worrying signs about the health of the economy.  Manufacturing continued to slow, which analysts attributed to the ongoing trade war with China.  Job growth dropped to 130,000 for the month, compared to a monthly average this year of 158,000 and a monthly average last year of 223,000.  And the current estimate for 3^rd quarter GDP growth is only 1.8%, while GDP growth for 2018 was 2.9%.

With these numbers in mind, the Fed reduced interest rates by .25% for the second time this year, and is widely expected to reduce them further.

The trade war continued in haphazard fashion.  At the beginning of the month, the U.S announced new tariffs of 15% on $100-billion of Chinese consumer products—only to announce shortly thereafter that trade talks were about to resume.  There are vague reports of progress in those talks, but no evidence of meaningful agreement.