September’s reputation held up well. Stocks and bonds both lost grounds however, we are now approaching what tends to be a positive quarter.
The average return for the S&P 500 for the 4th quarter is 4.20%.
Perhaps the best news, last Friday, the Fed’s favorite inflation gauge, the Personal Consumption Expenditure Index was reported increasing .1% on the core rate.
Other than the price of oil staying range bound at a high around $90/barrel, costs, for now, appear to have remained fairly steady. Hopefully the Federal Reserve is paying attention and will not raise rates for the remainder of the year.
Many investors, including myself do expect the economy to slow as the Fed’s rate hikes will eventually be felt in more areas other than just the housing market. When borrowing costs increase as they have, businesses and consumers will be impacted. It’s just a matter of time.
We kicked the can down the road as our government agreed for now, to avoid a shutdown. 45 days from now, we’ll hear similar rhetoric. We can only hope they can negotiate and agree well prior to the last day. Can consumer confidence fall any further when thinking about our government officials?
The United Auto Workers union is increasing the number of striking workers. It appears the union is determined to dig in for the long haul. It also appears the manufactures are doing the same. Unfortunately, as of now, no light exists at the end of the tunnel.
This week’s data will feature the monthly jobs report on Friday. On Tuesday we’ll hear the JOLTS report which reflects the number of job openings. Last month the JOLTS number fell significantly.
It seems counter-intuitive to desire job creation to slow and the unemployment rate to increase. Creating jobs is typically paramount to a good economy.
If employment can slow, perhaps that will convince the Fed to sit tight for the foreseeable future.
In a couple weeks, we’ll start to hear quarterly corporate earnings (profit) reports. Many are expecting profits to be reported flattish, which would be an improvement from shrinking profits over the last few quarters. I hope those who are forecasting profits to be flat, then increase going into 2024, are correct.
We need the Fed to be done raising rates and for profits to begin moving higher.
Here is where the major indexes stand year-to-date, moving into the 4th quarter:
- Dow Jones Industrial Average 1.09%
- S&P 500 11.68%
- Nasdaq 26.30%
- Russell 2000 1.35%
- Foreign stocks 5.00%
- Emerging Markets .13%
The Bloomberg Barclay’s Aggregate Bond Index is now down (1.15%) for the year. Rising market interest rates since August have pulled the index into the red.
Many believe that market rates have peaked, and the direction will be lower.
Oil prices have increased 13.24% so far in 2023. Gold is up 1.38% with silver down (7.44%).
Hopefully our Treasury is caught up issuing new debt as they had to play catch up after being delayed by our recent debt-ceiling standoff. The massive issuance of treasuries was a major cause of market rates rising over the last 2 months.
With so many challenging issues, it’s understandable why investors are bearish at the current time. Let’s keep in mind, before every bull market there are issues that need to be dealt with. We are realizing moving thru the remnants of covid and inflation take time, as there was no prior play book.
I believe, it’s just a matter of time before the economy and markets move forward in a positive way!!