S&P 500 Has Worst Month Since 2018 Compared to Global Indexes

US equities set to underperform global peers as job cuts accelerate. Disney became the latest company to announce mass job cuts, announcing yesterday that it will lay off  30,000 employees. The announcement comes on the heels of a similar announcement from airliners who will jointly lay off 30-40,000 employees. With a wave of job losses on the horizon, US equities are set to underperform global peers by the most since 2018. Today’s month end session is off to a volatile start, rates climbing sharply across the curve as lawmakers appear close to a fiscal stimulus deal- the 10-year Treasury yield climbing 2 basis points to 0.67%.

Democrats unveil new $2.2 trillion stimulus proposal.  The proposal, named the HEROES Act, includes another round of stimulus checks, $600-a-week unemployment benefits, funding for the SBA’s PPP, and more.  Though the bill smaller than the aid Democrats previously sought, it is still far from the larger $1.2 trillion bill President Trump was ready to back. Though President Trump has previously stated that he would back a larger bill, the new proposal costs more than the $1.2 trillion.  After speaking Monday night, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke again Tuesday morning to go “over the provisions” of the proposal.  Pelosi and Mnuchin have scheduled to meet again today, a sign the pair could be nearing a compromise.  The stimulus back-and-forth has seemed to have little effect on consumer attitudes of the economy, with August’s consumer confidence index shooting up to 101.8.  The level blew past economist expectations, posting the biggest gain in 17 years.

Q2 GDP estimate rises while private payrolls grow by 650,000.  This morning, the third estimate for Q2 GDP came in at -31.4%, slightly better than the -31.7% second estimate.  The reason for the slight rise is due to “an upward revision to personal consumption expenditures (PCE) that was partly offset by downward revisions to exports and to nonresidential fixed investment.”  The ADP also published the September employment report, which revealed private payrolls grew by 749,000 after increasing by only 481,000 (revised) the month before.  The level came in higher than economist expectations and serves as a precursor to Friday’s jobs report, which is expected to show nonfarm payrolls increasing by 900,000 and a declining unemployment rate.