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October’s Economy & Stock Market Update

October’s Economy & Stock Market Update

Review the latest monthly market update from Signature’s CIO, Scott Mitchell.

I can’t believe I’m writing this, but we are in the final quarter of the year!  I’m glad for the cooler weather that came over the weekend, but I will miss the long summer days.

Investors are probably glad that September is over, though.  The stock market, as measured by the S&P 500, had its biggest pullback of 2023 last month, losing nearly 5%.  Most stock sectors were down, although oil and gas did well on the nearly 9% rise in oil prices…I’m sure you noticed at the gas pump.  The major shift was that strategists went from the early summer mindset –that the economy would not suffer a recession–to a new mindset that the economy was bound to have a major slowdown and possibly even a recession.  That shift led some investors to trim their stock positions, driving prices lower.

To add to the pain, bond prices also did poorly last month.  When bond prices go down, interest rates go up.  This was evident in the rates on mortgages.  As of October 5, the average 30-year mortgage rate was 7.49%, up from a low of about 6% earlier this year.  Interestingly, the long-term average on the 30-year mortgage is 7.74%, so although rates have skyrocketed, they are still below average.  For new home buyers, though, it means that a purchase may be less attainable than it was a couple of years ago when interest rates were at rock bottom levels.  If interest rates stay this high, it could certainly put a lid on home prices, and maybe even drive them lower.

As of this writing on October 9, the S&P 500 has moved a little higher to begin October.  Over the weekend, another conflict flared up in the Middle East.  We are watching it, but most of the time, these events have very little intermediate or long-term impact on the stock market.  You’ll often see a short-term bump higher in the price of gas, gold, and the US Dollar, but those spikes usually don’t last more than a few weeks.  Unfortunately, conflict in the Middle East has been around longer than the stock market has, but fortunately, it has not had a meaningful impact on stock prices in the past. 

Assuming that a major escalation of that conflict is avoided, I think that stocks are set up well for the fourth quarter.  After the pullback in September, many stocks are less expensive and have more upside potential.  Despite a few nasty Octobers throughout market history, the fourth quarter is often a good one for investors, so seasonality is on our side, too.  As always, though, invest with your time horizon, goals, and risk tolerance in mind. 

I mentioned this last month, but please don’t forget to complete your required IRA distributions.  The penalties for not complying are steep.  If you’re not sure if you must take a distribution, check your IRA statement.  It should tell you.  Generally, it’s required for people who are 73 years old or older, but may apply to you if you inherited an IRA, too.  If you’re not sure, call your advisor to for help.

There are no stock market holidays in October, but it will be closed for Thanksgiving next month.  The end of the year tends to get busy for us as we try to meet year-end planning deadlines, so please don’t put off your planning until the last minute.

As always, these opinions are mine, and may or may not be the same as those of Raymond James. This is not a solicitation to invest, although we do invite you to review your portfolio with us to see if any changes should be made. Past performance may not be indicative of future results. There is no assurance any of the trends mentioned will continue or forecasts will occur. Investing involves risk including the possible loss of capital. Asset allocation and diversification do not guarantee a profit nor protect against loss. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Individuals cannot invest directly in any index. U.S. government bonds and Treasury notes are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury notes are certificates reflecting intermediate-term (2 – 10 years) obligations of the U.S. government. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Scott Mitchell and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

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