Hello everyone,

In a month marked by uncertainty and market volatility, the S&P 500 index emerged as a beacon of strength, reaching unprecedented heights in September 2024. The index's performance reflected a resilient stock market landscape that defied expectations and provided investors with a sense of optimism amid global challenges.

Throughout the month, the S&P 500 exhibited a consistent upward trend, with incremental gains contributing to its overall success. The index rose by 1.5% (ycharts.com/indices/%5ESPX/level), catapulting past the 5,700 mark for the first time in history. This milestone was a testament to the resilience of the U.S. stock market and its ability to weather geopolitical tensions and economic uncertainties.

Several factors contributed to the S&P 500's remarkable performance in September. A combination of robust corporate earnings, favorable economic data and dovish central bank helped bolster investor confidence which drove the market higher. Approximately 76% of (barron.com>market data>indexes) stocks, at the time of this writing, are playing a significant role in propelling the index to new highs, demonstrating the breadth of the market rally.

Amidst the positive momentum, investors closely monitored key economic indicators and geopolitical developments for clues about the market's future trajectory. The Federal Reserve's monetary policy decisions, with a 50-basis point cut, abating inflation concerns and global events, all played a role in shaping investor sentiment and influencing market movements.

As the S&P 500 continued its upward climb, market participants remained cautiously optimistic about the sustainability of the rally. While the index's performance in September was undeniably impressive, uncertainties loomed on the horizon, reminding investors of the importance of prudent risk management, and staying informed about market dynamics.

Brian Belski (BMO's Chief Investment Officer) is the biggest bull on Wall Street, raising the S&P 500 target to 6100, that's another 6.7% increase by year's end. His theory is based on the belief that the U.S. is not headed to recession, the Fed is doing a great job, and lastly that the financial marketplace is mirroring the '95, '96 environment where stocks can support 24 times earnings multiple. What that means is that stocks are trading 24 X's what each stock is entitled to after taxes, net income divided by all shares outstanding. Generally, the average on the S&P 500 price earnings multiple is about 20.3 (www.currentmarketvaluation.com/models/price-earnings.php). He also points out, and what he believes investors are missing, is that unlike the "Nifty Fifties, where fifty of most popular large-cap stocks traded at high valuations in the 1960s and 1970s, that the magnificent 7 stocks, have underperformed in the third quarter. This just gives rise and support to the said above that the market rally has breadth, in fact 339 stocks that make up the S&P 500 have outperformed the market and we haven't seen that in 22 years. 

He's not the only one that sees unicorns and rainbows. The U.S. Bank sees stocks remaining on track for a second consecutive above -average performance year. However, primary considerations for sustaining a bull market include:

1. Inflation and labor market trends: Monitoring the impact of inflation and labor market conditions on future Federal Reserve policy decisions, with a focus on potential economic weaknesses signaled by changes in unemployment rates.

2. Consumer and business spending: Tracking consumers' willingness to maintain reasonable spending growth, which I believe has been crucial for economic stability. Strong labor market conditions and wage growth have contributed to this trend, with early indicators suggesting that the economy is holding steady as third-quarter GDP growth awaits reporting.

3. Corporate earnings and stock valuations: The growth of second-quarter earnings by more than 10% compared to the same period in the previous year has defied concerns of a slowing economy. Market expectations anticipate continued earnings growth throughout 2024 and into 2025, underpinning the bullish outlook for stocks.
The S&P 500's performance in September 2024 serves as a reminder of the stock market's resilience in the face of adversity. As investors navigate an ever-changing landscape, staying abreast of market trends and maintaining a diversified portfolio will be key to capitalizing on investment opportunities and mitigating risks in an evolving global economy.

Looking ahead, historically, financial markets have exhibited varied behaviors in the month of October. Over the past two decades (2003-2023), October has been relatively favorable for the stock market, with the Dow Jones, S&P 500, and Nasdaq 100 ranking among the top-performing months (Investing.com – Stock Market Performance in October). Despite being known for volatility, October has seen an average S&P 500 return of 1.4%, which is higher than the average return of most other months (money.com – October Stock Market Volatility and Returns). While some notable market crashes have occurred in October, such as in 1929 and 1987, this month does not always guarantee negative performance (Investorpedia – The October Effect).

And with that, I bid you all a fantastic October, which is my favourite month! What's not to like? The NHL starts, turkey at Thanksgiving, Halloween, my birthday…..oh, and let's not forget the upcoming debate, Tim Walz and JD Vance, October 1st .  I'll have the popcorn popping…