Second Down Month in 2024

October 31, 2024

Despite a bad reputation the month of September closed with a gain of 2% for the S&P 500 and we wondered if October might be more difficult.  Except for April, the market had moved higher every month this year and despite steadily rising interest rates during the month, October stayed in positive territory for most of the month until a last day selloff spoiled the party.  During October we not only saw steadily rising interest rates, but heightened tensions in the Middle East, continued uncertainty about the election and high volatility in oil prices.  Despite all the “noise” the S&P 500 was able to gain ground during most of the month on the back of stronger than expected earnings from the technology sector.  Halloween was indeed spooky for a market that suddenly decided the technology sector was overvalued which sent the tech ETF down 3.2% and the S&P down 1.9% on the day to a loss of 1% for the month, but the widely followed index is still 19.6% higher on the year.  The rate on the 10-year Treasury Note moved up 14% in October.  Oil prices were down 3% for the month, but gold hit a new all-time high, closing the month with a gain of 3.3%.

The month began on a Tuesday with rising tensions in the Middle East and the first East coast dock strike in 50 years.  Israel’s response to Iran’s attack didn’t come during the week and the dock strikers reached a tentative agreement 3 days into the strike.  At the end of the week, we learned a much stronger than expected 254,000 new jobs were created in September and we ended a volatile week with the S&P fractionally higher for the week and down just .2% for the first 4 days of October.  The first full week was the best of the month for the S&P 500 as good inflation reports combined with plunging oil prices sending the index 1.1% higher.  The second full week saw more new all-time highs for the major indices as strong earnings reports drove the S&P 500 .8% higher for a 6th consecutive week of gains.  A growing economy with interest rates and inflation easing is creating a “Goldilocks Scenario” where things are just right.  The third full week saw an end to the 6-week winning streak as rising interest rates continued to weigh on the market.  Much of the rally this year has been based on lower rates and the rise to a 3-month high is putting that thesis in question.  It was a relatively quiet week but a 1% drop on Wednesday left the S&P 500 down 1% for the week.  We ended the month with another 4-day week that saw oil prices have their worst day in 4-years, interest rates hit the highest level in 3 months and corporate earnings created volatility.

November is the start of what has traditionally been the best 3-month period for stocks.  Historically nearly 50% of all gains for the year take place in the November – January period.  Investors tend to be in good moods during the holidays and January is the month with the largest inflow of funds into retirement accounts.  With that said, the S&P 500 has moved higher 9 of 10 months this year and is up more than 20%.  Stock valuations are rich, and the market is technically due for a pullback.  Quarterly earnings and interest rates should be the market drivers in November.  Our early look at corporate earnings would indicate they should be good, and we know the Federal Reserve would like to see interest rates move lower.  In the Goldilocks scenario we described above one would expect any pullback would be an opportunity to increase market exposure.  The election will be responsible for short term volatility, but it has traditionally not had a lasting impact.  We continue to be cautious as the market is vulnerable, but we would be buyers of a tradeable dip.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.