Key Points

• Following the Federal Reserve cutting rates at the higher end of expectations by 50bps—its first rate cut since March 2020—equity markets finished strong in a historically weaker month.
• A series of Chinese monetary and fiscal stimulus announcements at the end of September drove the Nasdaq Golden Dragon China™ (HXC™) Index up by nearly 30% — its largest one-month gain since November 2022 and the second largest in history dating back to November 2005.
• There were pockets of strength in the suite of Nasdaq indexes—particularly in thematic suites—as digital health, video games and esports; emerging market indexes (driven by China); select renewable energy and transition metals; and cryptocurrencies registered strong-to-moderate performance. Although the broader tech sector struggled in September, AI-related indexes finished the month positively.

Chart of the Month
 

Source: Bloomberg

Executive Summary

The Fed delivered its highly anticipated first rate cut of 50bps on September 18^th—above what the market was pricing in earlier in September but not necessarily a "surprise" vs. consensus heading into its policy meeting. Treasuries rallied into the decision, with U.S. Treasury 10-year and 2-year yields dropping in line from 3.9% to 3.6%; afterward, short-term rates held steady while long-term rates diverged modestly higher, likely reflecting prospects for stronger economic growth. Nevertheless, a moderating inflation backdrop coupled with slower, yet stable, labor markets helped risk assets as the Nasdaq suite of indexes registered an average gain of 2.6%, and the Nasdaq-100® (NDX®) rose for a second consecutive month, adding 2.5% in September—NDX is now higher by nearly 19% YTD. The Fed decision was notable as it was its first rate cut since March 2020 and adds to the recent trend of global central banks beginning to pivot away from extremely restrictive monetary policies. The markets, though, quickly turned to debating the potential impacts of the monetary and fiscal stimulus announced in China at the end of September. The Chinese central bank cut key interest rates. It injected liquidity into the financial system while the government provided fiscal stimulus and top Chinese officials pledged further economic support at their September Politburo meeting. These measures were taken in an effort to restimulate growth, support a structurally challenged property market, and spur underperforming equity markets—and expectations are for further stimulus in October. While the Chinese economy and markets face systemic headwinds, in the near term, Chinese equities spiked as the Nasdaq Golden Dragon China Index, which tracks U.S.-listed shares of Chinese companies—closed September with its second-best week on record going back to 2005 and had its second largest monthly gain ever. Though the fourth quarter is historically the strongest period of the year, U.S. and global markets face escalating geopolitical tensions, the upcoming U.S. Presidential election, a steady but slowing U.S. economy, and debate around the speed and size of Fed rate cuts. 

Nasdaq Indexes September 2024 Performance Recap

Among the 119 indexes tracked in this report, 108 finished in positive territory, while 11 ended the month in negative territory. Five indexes, all within the Nasdaq Thematic Renewables & Energy Transition Materials space, registered double-digit returns. The average return across all indexes was 2.6%. 

Nasdaq Featured Indexes 

Eight out of nine Nasdaq Featured Indexes registered positive returns in September. Within the Nasdaq Featured Indexes, the Nasdaq Q-50™ (NXTQ™) was the top performer, registering gains of 4.6%. The Nasdaq-100 Technology Sector™ (NDXT™) was the worst performer, falling 0.2% as the sector and AI-related proxies remain volatile amidst a broadening in equity market performance. On average, the group was up 2.2%. 

Nasdaq Global Indexes

The Nasdaq Global Indexes finished in positive territory and registered an average gain of 2.7% in September. The Nasdaq Emerging Markets™ (NQEM™) was the best performer, registering returns of 7.2%--driven by the aforementioned gains in Chinese equities in response to the series of stimulus announcements. The group's laggard was the Nasdaq Europe™ (NQEU™), which gained 0.6%. 

Nasdaq Thematic Tech Indexes

Performance was broadly positive for the Nasdaq Thematic Tech Indexes suite, with all but two indexes registering positive returns. The indexes registered positive returns of 2.5% on average as a group. The Nasdaq CTA Global Digital Health™ (BEWELL™) was the top performer, registering gains of 9.7%, followed closely by the Nasdaq CTA Global Video Games & Esports™ (PLAYER™), registering gains of 9.4%; another notable outperformer was the Nasdaq CTA Global Climate Technology™ (CLMTCH™) index, which gained 6.9%. China-based constituents produced outsized return contributions in each case. Meanwhile, Nasdaq’s AI-related indexes, the Nasdaq Global AI and Big Data™ (NYGBIG™), the Nasdaq CTA Artificial Intelligence & Robotics™ (NQROBO™), and the Nasdaq CTA Artificial Intelligence™ (NQINTEL™), finished the month with weaker respective returns of 3.6%, 1.6%, and 0.0%. The Nasdaq US Smart Semiconductor™ (NQSSSE™) and the Nasdaq Biotechnology™ (NBI®) were the two indexes to finish in the red with respective losses of 0.6% and 2.3%. 

Nasdaq Thematic Renewables and Energy Transition Materials

The suite of indexes bounced back from a weak performance in August, registering an average return of 6.9% in September. The Nasdaq Sprott Junior Uranium Miners™ (NSURNJ™), the worst performer of the group last month, managed to post the strongest return out of all indexes tracked in this report with a gain of 16.0% amid favorable developments in the nuclear energy space, including multiple potential reactors coming back online to support AI-related data center buildouts. Nasdaq Sprott Lithium Miners™ (NSLITP™) wasn’t too far behind with a gain of 12.6%. Despite a gain of 0.4%, the Nasdaq Future Global Sustainability Leaders™ (NQFGSL™) was the relative laggard of the group. 

Nasdaq Dorsey Wright

All but two indexes in the suite rose in September, delivering average returns of 1.8%. The best performer was Dorsey Wright Utilities Tech Leaders (DWUT™), registering gains of 6.3%, while the worst performer was once again the Dorsey Wright Energy Tech Leaders™ (DWEN™), registering losses of 5.5%. 

Nasdaq Dividend and Income Indexes

The average return across the suite of indexes was 1.8%, and all but one finished in positive territory in September. The Nasdaq Emerging Markets High Equity Income™ (NQEMHEI™) registered gains of 5.1%, followed closely by Nasdaq Select Canadian Dividend™ (NQCADIV™), which registered gains of 3.9%. The Nasdaq US High Equity Income™ (NQUSHEI™) was the worst performer, registering a decline of 1.0%. 

Nasdaq Multifactor Indexes

All but one index in the group posted positive returns. The Nasdaq AlphaDEX Large Cap Growth™ (NQDXUSLCG™) was the best performer, registering a gain of 3.1%, while the Growth Strength™ (NQCAPSG™) registered a loss of 0.2%. On average, the group was up 1.3%. 

Nasdaq Sector-Specific Indexes

The average return across the suite of indexes was 0.2%. The best-performing index of the group was the KBW Premium Yield Equity REIT™ (KYX™), which registered gains of 3.2%, closely followed by PHLX Gold/Silver Sector™ (XAU™), up 3.1%. In comparison, the worst-performing index was the KBW Regional Banking™ (KRX™), which registered a loss of 2.2%. 

Nasdaq Options and Other Quantitative Indexes 

All but one index in the group registered positive returns in September. The best performer was the Credit Suisse Nasdaq Silver FLOWS106 TR™ (QSLVOTR™), registering positive returns of 5.4%. The worst performer was the Credit Suisse Nasdaq WTI Crude Oil FLOWS106 TR™ (QUSOITR™), registering losses of 4.6%. On average, the group was up 1.6%. 

Nasdaq Crypto Indexes

The Nasdaq Crypto lineup rallied in September, with Nasdaq Bitcoin™ (NQBTCS™) the best performer, registering a solid gain of 8%. The broader Nasdaq Crypto™ (NCIS™) was not too far behind, with a gain of 7.6%. Cryptocurrencies broadly rose into month’s end, likely driven by the Fed’s cut which has weakened the U.S. dollar. In addition, inflows were strong with US-listed spot Bitcoin ETPs attracting $1.2B in net new flows, while major crypto investor MicroStrategy purchased at least $1.5B in Bitcoin for its own account.
 

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