Market Analysis

The S&P 500 Equal Weighted Index (SPW) and the S&P 500 Index (SPX) achieved remarkable returns in the third quarter, with their performances ranking above the 90th percentile of historical quarterly results, according to analysts at Barclays. Notably, the gains were strongest at the beginning of the quarter, particularly in July, which saw returns in the 97th percentile. This is especially significant given that the third quarter, particularly July, usually poses challenges for SPW.

Looking ahead, while the fourth quarter is generally supportive of equities, seasonality may favor SPX in October and SPW in December. Barclays strategists highlight three important points:

The upcoming earnings season could provide a lift for both SPX and SPW, as earnings estimates have been substantially revised down, especially in non-technology sectors.

The positive seasonality in December for both indices may coincide with the long-anticipated alignment in earnings growth between Big Tech and the broader equity market.

The conclusion of the U.S. presidential election in November may benefit SPW, as Value stocks, closely associated with SPW, typically perform well in the aftermath of such elections.

Overall, Barclays believes that the broadening trade may experience a temporary pause in the coming month before fundamental factors and thematic positioning draw buyers back closer to the year-end.

In related news, U.S. stocks experienced a decline on Thursday as investors awaited the September jobs report and kept an eye on the escalating conflict in the Middle East. The upcoming payroll report is considered vital for determining the direction of U.S. interest rates, with economists projecting an addition of 140,000 jobs and an unchanged unemployment rate of 4.2%.

The Dow Jones Industrial Average fell by 184.93 points, or 0.44%, closing at 42,011.59. The S&P 500 decreased by 9.58 points, or 0.17%, ending at 5,699.96, while the Nasdaq Composite declined by 6.65 points, or 0.04%, finishing at 17,918.48.

Additionally, the CBOE Volatility Index, which measures market fear, rose to 20.49, marking its highest level since early September.

Paraphrasing text from "Investing" all rights reserved by the original author.