Markets Wrapping up Positive in September Amid Low Volatility

Let's get to the big story breakdown.

September is usually the worst month for stocks, but that trend sure didn't hold the S&P 500 up about 3.8% month to date.

Now the equal weight index outperformed the main S&P, while small caps like but ended last week stronger than large caps.

Now volatility does remain low, but with triple wedging behind us and quarter and ahead, will we see a Volatility great again moment.

Well, the final week of the quarter brings a government shutdown deadline and a big jobs report on Friday, or possibly not.

Well, joining me here at the New York Stock Exchange is Michael Ryanking, senior market strategist here at the New York Stock Exchange.

Michael, good morning.

Thank you so much for joining me.

Good morning, Remy.

Yes, and it looks like at this point, you know, most likely not.

So when it comes to the impact of the government shutdown, what does this usually mean for markets?

Yeah, I mean, markets tend to kind of look past this, right, we know at this point, you know, unless the government shutdown tend, you know, lasts for a long period of time, right, markets have looked past these sorts of events, you know, if you kind of drag that on and they're they're.

You increase the concerns around that triggering a recession or job losses, right?

You can start to see a bigger impact, but in general these things tend to get figured out.

You know, one of the harder things this time around is that we don't have the debt ceiling attached to this to this shutdown, right?

That usually is kind of that gun to the head moment where you get, you know, a last minute deal that's not attached to this, you know, kind of this negotiation process, so it could drag out a little bit longer.

And of course heading into this week, initially we were looking ahead to Friday for more insight into the labor market, but we do get other jobs figures, including today at 10 a.m. we'll get Jolt's figures, although that is much more backward looking than other labor market data.

We also have ADP on tap tomorrow morning.

So what are you looking for?

Yeah, so in terms of the jolts numbers, right, we've seen kind of this softening, kind of, I'd be paying attention to kind of the ratio of unemployed to open jobs that's been moderating down to kind of a ratio of around 1.

Um, which is something the Federal Reserve pays attention to.

And then within that, you know, really the key I think is the separations, right, and that's been running around 1%, you know, just over 1%, which is very historically low number.

If we start to see that begin to move up, right, that would be a bit more concerning.

You know, the ADP numbers have done a pretty good job, I would say, you know, kind of more recently.

In kind of giving you a direction of kind of how the labor market is kind of shaping up, right, so markets will be paying attention to that and you know at this point it does look like we're not going to see kind of those numbers on Friday.

Now the claims numbers that we got last week, we we had fallen for the second consecutive week, so we had this big jump in initial claims up to about 267,000.

And then that's, you know, we had kind of at the time talked about the standout and the Texas numbers in there that there may have been some seasonality that seems to have kind of worked its way out and we've now fallen back to around 220,000 right so markets have gotten a little less concerned about the labor market falling off of a cliff at this point.

Yeah, and we can't forget the fact that today is the final day for the month as well as Q3.

And when we take a step back, we saw the major US stock averages all hit record highs in Q3, and we do remain elevated year to date, the S&P 5. is up 13% and the usual suspects including communication services, IT, as well as industrials and utilities seeing strong gains.

But on the heels of the latest tariff announcements, what could we see heading into the final quarter?

Yeah, so, well, the thing that ties, the thread that ties all of those sectors that you just mentioned together is AI, right, and that is, you know, kind of the AI kind of infrastructure spending that we're seeing.

You mentioned just this morning, you know, we had the deal with meta and core weave, right, and that's really, you know, throughout this year.

Has really kind of expanded just beyond information technology right into the industrials into the utilities that are providing the power to those companies right?

So you know just just to kind of you know really highlight that for your kind of viewers as we move into kind of Q4 right you've mentioned that we went through this.

Historically difficult time period from a seasonal perspective from markets.

Now in the very, very short term, like traders will be watching to see if you have any rebalancing flows that come in you know kind of in the close today just given the strong month of September and we didn't see.

As strong a rally in treasury markets so you could see some reallocation, you know, out of equities into treasuries and that might even carry you know kind of into this to the start of Q4 tomorrow.

I think the key from here, right.

If the government does have a shutdown, we're going to not have that economic data to provide that kind of that guide.

From a Fed perspective, I would suggest that if we don't see an update to the data that they would cut again in October, right, just because I think the balance of risk right now, it's on the economic data to stop them from another rate cut at this point, just given the softening they've seen.

So I think that. would firm up a potential 25 basis point cut and then I think the real key that as we move into kind of the end of this year is going to be kind of earnings and we're going to we're going to get into earnings in a couple weeks here.

We're going to need to see how companies have been performing.

They've done a really good job throughout this year and then hopefully we'll start to get maybe a little bit of guidance as they kind of look out to next year.

OK, Michael, well thank you so much for joining me as we head into the final quarter of this year and thank you for all of your insight.

Thanks for having me.