Shiny September days for stocks

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Traders work on the floor at the New York Stock Exchange.

Brendan Mcdermid | Reuters

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Cooler-than-expected inflation
The personal consumption expenditures price index for August rose 0.1% for the month. Year over year, prices rose 2.2%, lower than the Dow Jones survey consensus of 2.3% and July’s 2.5%. Core PCE, which excludes food and energy prices, increased 0.1% in August and 2.7% from a year ago. Economists were expecting 0.2% and 2.7% respectively.  

Chinese stocks skyrocket
U.S. markets traded mixed Friday. The Dow Jones Industrial Average was the only major index to rise, and closed at another record high. Asia-Pacific markets were mixed Monday. China’s Shanghai Composite soared more than 8%, lifted by a rally in Chinese property stocks. Japan’s Nikkei 225 slumped around 4.7% as investors react to results of the Liberal Democratic Party election last Friday.

China’s factory activity shrinks less than expected
China’s manufacturing purchasing mangers’ index came in at 49.8 in September, according to data from the National Bureau of Statistics released on Monday. A number below 50 indicates a contraction, meaning China’s factory activity has shrunk for five straight months. Still, the reading’s higher than the 49.5 expected by economists polled by Reuters.

Enforcing oil output cuts
The OPEC+ alliance is looking to crack down on member countries that aren’t following oil output cuts, two OPEC+ delegates, who could only comment anonymously because of sensitivity issues, told CNBC. This move comes after oil prices fell sharply on a Financial Times report that Saudi Arabia was prepared to abandon its $100 oil price target.

[PRO] Volatile month ahead?
September has historically been the worst month for stocks, but stocks this year have performed surprisingly well. Still, October poses a threat because it’s the most volatile month for stocks, according to a CNBC Pro analysis of historical data. Friday’s nonfarm payrolls report for September might be the first catalyst for price movements.

The bottom line

Do you remember? The past four Septembers have not been kind to stocks, with the S&P 500 dropping at least 4%. Even when the broad-based index jumped more than 24% over the course of 2023, it still lost 5% during September.

Not this time. Despite the S&P retreating 0.13% and the Nasdaq Composite losing 0.39% on Friday, both indexes ended the week about 0.6% and 1% higher, respectively. The Dow Jones Industrial Average had a more impressive showing, climbing 0.33% for its sixth consecutive positive day and closing at yet another all-time high.

The three major U.S. indexes have thus far posted three straight positive weeks. With just one trading day left in the month, it’s almost certain they’ll finish September in the green.

Stocks’ defiant showing this September was helped by positive sentiment generated by the U.S. Federal Reserve’s jumbo rate cut and upbeat economic data.

The PCE price index, which tracks the amount consumers spend on goods and services, came in cooler than expected.

Relatedly, the University of Michigan’s consumer sentiment index for September rose to a better-than-forecast 70.1 from 67.9 in August.

“All quiet on the inflation front,” said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley. “Inflation continues to keep its head down, and while economic growth may be slowing, there’s no indication it’s falling off a cliff.”

In fact, growth is far from “falling off a cliff.” Second-quarter gross domestic product grew at 3%, according to the U.S. Bureau of Economic Analysis. Even better, the Atlanta Fed’s GDPNow forecast estimates third-quarter growth to touch 3.1%.

While no one is sure how long this period of golden dreams and shiny days can last, it’s hard to deny stocks are dancing in September.

– CNBC’s Jeff Cox, Brian Evans and Pia Singh contributed to this story. 

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