It's Still September

*Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

DJIA52-wk: +10.11% | YTD: +8.86% | Wkly: +1.05%

S&P 50052-wk: +16.87% | YTD: +13.31% | Wkly: +1.22%

NASDAQ52-wk: +26.09% | YTD: +17.20% | Wkly: +2.21%

Consumer Discretionary Select Sector SPDR52-wk: +22.73% | YTD: +7.60% | Wkly: +1.16%

Market Performance

The S&P 500 rose about +1.2% for the week. AmeriServ Bank

Nasdaq was up ~+2.2%, driven by tech and AI-related strength. AP News

The Dow Jones Industrial Average gained around +1.0% for the week. AP News

Small-cap stocks (Russell 2000) underperformed, dropping slightly (~ -0.8%) on Friday but still logged a decent weekly gain. AP News+1

🔑 Key Drivers & Themes

Rate Cut Expectations

The Fed’s meeting on September 16-17 was front and center. Markets largely expected a 25 basis point cut, and commentary/trends pointed toward more cuts later in the year. Interactive Brokers

Inflation & Economic Data

Mixed signals:

Consumer inflation remained elevated, though some components eased.

Job-growth data had downside revisions, raising questions about economic strength. Oppenheimer.com

Tech & AI Lead the Rally

Mega-cap technology names and AI-adjacent firms continued to outperform. The Nasdaq’s strong week was largely driven by these sectors. Investopedia

Broader Market Breadth is Narrow

While indices hit record highs, many stocks outside tech/AI lagged. Some sectors like small-caps didn’t participate as strongly. Interactive Brokers

Global & Geopolitical Moves

Developments like trade negotiation improvements (e.g. U.S./China/TikTok), and easing/expected rate cuts abroad, also boosted sentiment. The Wall Street Journal

Interest Rates & Treasuries

Treasury yields were relatively stable but slightly lower in some places. The 10-year note, in particular, pulled back as rate cut expectations strengthened. Waterford Advisors

⚠️ Risks & What to Watch

If inflation surprises or stronger-than-expected economic data arrives, it could spike yields and upset the rate-cut narrative.

Policy guidance from the Fed (especially the dot plot) will be key: any indication they expect fewer cuts could trigger pullbacks.

Volatility remains possible due to narrow leadership: if tech or AI stocks weaken, broader indices may struggle.

International concerns (trade policy, currency moves) and corporate earnings miss expectations in non-tech sectors.

Investors withdrew massive capital out of U.S. equity funds in the week to Sept.17 as they turned cautious about the market’s lofty valuations following the recent rally through a policy rate cut and rushed to lock in profits.

According to LSEG Lipper data, investors pulled out a net $43.19 billion from U.S. equity funds in the week, logging their largest weekly net sales since a $50.62 billion weekly outflow in mid-December 2024.

“The S&P 500 forward price-to-earnings ratio, at 22.6x, is in the 99th percentile over the past 20 years”, said Mark Haefele, chief investment officer at UBS Global Wealth Management.

U.S. large-cap funds had a net $34.19 billion weekly outflow. (Reuters)

Ordinary investors who worry about missing out on a warming initial public offering market should take a deep breath.

Key Points

About This Summary

Retail investors’ chances of getting shares in IPOs are improving, as more shares are allocated to them.

Brokers like Robinhood and Moomoo are allocating IPO shares to retail clients, with some issuers demanding it.

Allocation methods vary among brokers, with some using asset-based rankings. Robinhood uses random selection.

Ordinary investors who worry about missing out on a warming initial public offering market should take a deep breath. Their chances of getting shares are improving.

Shares in an IPO have long been a coveted Wall Street prize. Bankers doled them out to institutions, wealthy clients, and executives who might bring future banking business. Most shares still go to deep-pocketed investors, but people with less money are starting to get more of the pie.

In recent hot IPOs like Bullish and Gemini Space Station, hundreds of millions of dollars worth of stock has gone to the clients of the retail brokers Robinhood Markets and Moomoo Financial. Issuers like the crypto platform Bullish have demanded that portions of their offering be reserved for the retail crowd. Retail participation also seems to help post-IPO price performance, according to research by the market maker Citadel Securities.

“In Gemini, we subscribed for $400 million worth in the U.S. alone, and our average customer subscribed for $15,000 worth,” says Neil McDonald, CEO of the U.S. unit of Moomoo. “It’s bonkers.”

McDonald estimates that the firm’s clients have taken down over $1 billion in shares of the last few IPOs. As part of the Hong Kong-based financial firm Futu Holdings, Moomoo subscribes for shares on behalf of Asian brokerage customers, too.

Behind the growing participation of small investors in IPOs is the rise of retail trading and investor discussions on social media. Companies like the crypto broker Gemini do business with small traders, and they want their shares to end up in the hands of their superfans.

“It’s part of the broader narrative that’s going on,” says Robinhood’s chief brokerage officer, Steven Quirk. “Small retail traders want a part of it and they don’t want to be

told that their accounts aren’t large enough. And you’re starting to see the allocations go up.”

Robinhood may have been the first firm with an IPO program for its customers. Since 2021, it has gotten clients into 36 offerings. Now, many brokers have a way for customers to register their interest in participating in IPOs, though some still reserve their programs for clients with large accounts.

Fidelity, for instance, requires a minimum of $100,000 of particular assets at the firm. IPO shares can’t be bought on margin, so the cash for the shares must be there.

All firms require clients to fill out forms to ensure they follow regulations that bar IPO participation by people associated with the financial services industry.

No one ever gets all the shares they would like, in an oversubscribed offering. And every broker is adamant that the final allotment isn’t a function of how many a customer requests. That is meant to prevent people from overbooking.

One of the main temptations of a hot IPO is the opportunity to flip the shares for a quick profit. But brokers can punish customers who resell IPO shares within 30 days. Punishments range from a penalty fee, to a 180-day ban from getting IPOs.

How much of an allocation a customer will get depends on the broker.

Watch the Federal Reserve’s rate decision and its forward guidance.

Key economic data: inflation (CPI/PPI), consumer sentiment, labor market reports.

Sectors likely to benefit housing/construction (given rate cuts), consumer discretionary, and possibly financials.

Keep an eye on small cap performance to see if the rally broadens.

What the Breadth Data Suggests

Mixed Breadth / Narrowing Participation

The S&P 500 large-cap index had strong gains, but the equally-weighted S&P 500 notably underperformed, indicating that gains were heavily driven by a smaller number of large stocks rather than broad participation across the market. Highland Associates

On Tuesday, Sept 16, only ~44.3% of stocks advanced vs about 52.3% that declined. That means more than half the market was lagging even on a strong week. ChartMill

— Richie

This content (“Content”) is produced by Richard Naso. The Content represents only the views and opinions of Mr. Naso who is compensated by TradeZero for producing it. Mr. Naso’s trading experiences and accomplishments are unique, and your trading results may vary substantially from his. TradeZero does not endorse the Content and makes no representations or warranties with respect to the accuracy of the Content or information available through any referenced or linked third party sites. The Content has been made available for informational and educational purposes only and should not be considered trading or investment advice or a recommendation as to any security. Trading securities can involve high risk and potential loss of funds. Furthermore, trading on margin is for experienced investors whereby the loss can be greater than your initial investment. Likewise, short selling as a securities trading strategy is extremely risky and can lead to potentially unlimited losses. Options trading is not suitable for all investors as it can involve risk that may expose investors to significant losses. Please reach the Characteristics and Risks of Standardized Options, also known as the options disclosure (ODD) at OCC.

TradeZero provides self-directed brokerage accounts to customers through its operating affiliates: TradeZero America, Inc., a United States broker dealer, registered with the Securities and Exchange Commission (SEC) and member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC); TradeZero, Inc., a Bahamian broker dealer, registered with the Securities Commission of the Bahamas; and TradeZero Canada Securities ULC, a Canadian broker dealer, member firm of the Canadian Industry Regulatory Organization (CIRO) and member of the Canadian Investor Protection Fund (CIPF).