Interactive Investor

Month in the markets: shares feel autumn chill

7th October 2021 12:50

Tom Bailey from interactive investor

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Driving losses were mounting fears of inflation, US Congress budget concern and Fed tightening expectations.

September was a disappointing month for US shares. The S&P 500 index started the month by posting a new all-time closing high. However, as the month progressed the index started to falter, closing the month down by 4.8%. That performance bought its year-to-date price return to 14.7%.

Other US indices also floundered. The Dow Jones Industrial Average lost 4.3%, giving it a year-to-date return of 10.6%. Small and mid-caps also struggled. The S&P MidCap 400 was down 4.1% for the month, bringing its year-to-date return to 14.5%, while the S&P SmallCap 600 lost 2.56% in September, giving it a year-to-date return of 19%.

Driving these losses were mounting fears of inflation, an ongoing budget deadlock in the US Congress and the anticipation of a removal of Federal Reserve liquidity.

However, as disappointing as the losses were, the sell-offs were mostly orderly, says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. He notes: “The damage was controllable, and the sells were orderly, with the worst one-day drop being -2.04% [for the S&P 500], on 28 September 2021.”

The S&P 500 index posted one all-time high in September. In comparison, it posted 12 in August. The index has now posted 54 all-time closing highs this year. It has also posted new closing highs in every month since last November.

Nearly every sector in the S&P 500 posted a loss. Materials led the way, losing 7.2%. That was followed by communication services, with a return of -6.6%. The only sector to post a positive return was energy, with a price gain of 9.4%, owing to skyrocketing oil and gas prices. This was a reversal of August, where all sectors posted a gain with the exception of energy, which lost 2%.

Every factor-based US index posted a loss, with the S&P High Yield Dividend Aristocrats leading the way with a loss of 5.10%. S&P 500 High Beta was the best performing, with a loss of 1.86%.

Elsewhere, returns were also mostly in the red. The S&P Europe 350 lost 2.87%, while the S&P Europe MidCap BMI and S&P Europe SmallCap BMI also all posted losses in excess of 4%. Meanwhile, returns from the S&P United Kingdom were flat.

Most sectors in Europe experienced losses in September, with the exception of Energy, up 14%. Financials were able to post a small gain of less than 1%. Real estate and utilities saw some of the biggest monthly losses, losing 7% and 9%, respectively.

Beyond the US and Europe, most markets also posted monthly losses. The S&P Global BMI fell by 3.9%. While this was partly the result of the US’ large weighting in global indices, S&P Global ex/US BMI still saw a 3% loss.

Emerging markets struggled, with the S&P Emerging BMI down by 3.5%. Latin America suffered some of the biggest losses, with the S&P Latin America 40 down by more than 10%. Despite all the bad news surrounding the implosion of Evergrande (SEHK:3333) in China, the S&P China 500 outperformed with losses of just 2.1%.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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