Main Content

September 2021 in Review

Daniel Zeigler, CFP, CMFC, Portfolio Manager



Hi everyone, this is Dan Zeigler, Portfolio Manager at Midland Wealth Management. Today I just wanted to provide a quick recap on the markets for the month of September.

During the 3rd quarter, the S&P 500 officially doubled its return from its pandemic bottom, which actually marks the fastest bull market rally since World War II, and it only took 354 trading days.

Up until September, the market had experienced little volatility over the last year, however, the S&P 500 index did see its first 5% decline as we wrapped up the quarter. It had been about 42 weeks since our last 5% decline in the market and a correction was likely overdue. Typically the S&P 500 index will experience a 5% correction every ten weeks on average. In September the index was down about 4.68%, and still slightly positive for the 3rd quarter and the S&P 500 remains up close to 16% for the year.

Most market sectors have been trading sideways since May and June when the Delta variant became a real concern. This once again created uncertainty for the U.S. economy, driving investors back to the COVID-19 winners of last year, namely large cap technology names.

Extremely strong corporate earnings growth has certainly contributed to the stock gains this year. We believe the 2nd quarter will mark the peak in earnings growth for this cycle with an average year-over-year earnings growth rate of 95%. Although we expect a deceleration in the rate of growth, we are still anticipating 3rd quarter earnings to grow around 30%.

Markets continue to focus on the Fed’s interest rate policy, inflation, increased China regulation, and current fiscal debates about the debt ceiling and future policies. The Fed appears ready to begin tapering their $120 billion bond portfolio later this year, which would then be followed by future rate hikes. Inflation continues to be on everyone’s radar and is higher than the Fed’s long-run target, however, it may subside over the next year as supply chains begin to catch up with demand.

The current dynamics in the market lead us to remain slightly overweight equities with an underweight to bonds.

Thanks for joining me today for a brief update for the month of September. If you haven’t had a chance to read our latest newsletter for the 4th quarter, make sure to check it out on our website.