5 Best Performing Stocks In September

Mixed Data on Housing

Housing data presented a mixed picture, indicating uneven growth across regions and rising prices which were deterring homebuyers. Housing starts declined 3% in August, lower than the consensus estimate of 1,161,000. However, building permits in August rose 3.5% from July.

Pending Home Sales declined 1.4% to 109.4 in August, hitting its lowest reading in last five months. Existing home sales fell 4.8%. However, new home sales increased 5.7% in August.

Additionally, the S&P/Case-Shiller Home Price Index gained 4.7% year on year in July, higher than a gain of 4.5% in June. Both the 10-city index and 20-city index gained 0.6% in July. According to the report, price increase in the western region of the country was higher than that in the eastern region.

Moreover, Homebuilders’ confidence for new single-family homes, as indicated by the National Association of Home Builders (NAHB)/Wells Fargo housing market index (HMI), rose to 62 in September. The reading has remained above 60 for four straight months

China Fears Spook Markets

Dismal data coming out of China continued to worry investors. China’s official manufacturing purchasing managers index (PMI) fell to its lowest level in three years in August. Meanwhile, China’s nonmanufacturing PMI dropped to 53.4 last month from 53.9 in July.

Weak Chinese trade data raised hopes that further stimulus measures will be announced to boost its fragile economy. The world’s second largest economy saw its exports drop 5.5% in August from a year earlier, while its imports plunged 13.8% from year ago levels.

Chinese government’s provided reassurances that it would work toward boosting its sluggish economy. But the flood of poor economic numbers continued. China's fixed-asset investment growth slowed to 10.9% in the first eight months of 2015. This is the weakest in about 15 years. Factory output increased 6.1% in August from prior year period, below expectations of a 6.4% increase.

Shares of raw material producers tumbled after China’s manufacturing data fell to its lowest level in September since Mar 2009. The preliminary Caixin China Manufacturing Purchasing Managers’ Index declined to 47 in September, lower than last month’s final reading of 47.3.

The latest of this series of disappointing reports is a fall in profits of industrial companies. Profits in Chinese industrial companies dropped 8.8% from the year-ago level in August. The Asian Development Bank (ADB) has trimmed China’s economic growth forecast for 2015 to 6.8% from an earlier projection of 7.2%.

Oil Slump Continues

Oil prices resumed their decline this month. On the very first day of September, prices snapped an impressive three-day rally of more than 27% following weak Chinese manufacturing data.  

Oil prices fell significantly after the Energy Information Administration (EIA) trimmed its WTI crude oil price projections for 2015 and 2016. Meanwhile, Goldman Sachs (GS) analysts lowered their oil price forecast through next year. A 2-week winning streak ended on Sep 11 as prices lost over 3% for the week. Dismal data from China also weighed on prices.

Prices rebounded on Sep 15 after the EIA forecasted that production in some of the major shale-oil fields may decline 80,000 barrels per day within October. However, the Fed’s decision on interest rates also had a negative impact on oil prices on Sep 18. Prices rebounded on Sep 21 on bets that global crude production will decline in future.

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