Nice Rebound

October 31, 2022

October has a bad reputation as it has been the home of 3 of the worst stock market crashes in history, but the month has historically ended in positive territory.  Other than a few tech stock collapses, the scariest thing about this October was Halloween, as the September blood bath was followed by a strong month for stocks.   Interest rates continued to move higher during the month, but at a more measured pace than the spikes we saw in August and September.   Oil prices did move higher as concerns about an imminent recession were dissuaded by better than expected corporate and economic numbers.  Unemployment remains low and the consumer, although fighting higher prices, continues to be resilient.  Our economy is 70% consumer driven and late in the month we learned Q3 GDP annualized at a positive 2.6%, not what you would expect to see in a recession.  At the end of the month the S&P 500 had gained 8% and is now down 18.8% for the year.  The 30 stock Dow Jones Industrial average had its best month since 1976 gaining 14%! Tech stocks continued to lag, with the NASDAQ up just 3.9% in October and still down 29.8% for the year.  Interest rates hit the highest level in 14 years and oil prices rose 10%.  Gold moved lower for a record 7th consecutive month, as the dollar continued to climb.

Coming off a dismal September the new month began with interest rates declining and that ignited a 2-day rally of more than 5% for the S&P 500, but much of that gain was given back on Friday when we learned a stronger than expected 263,000 new jobs were created in September.  Strong job creation is inflationary and goes against what the Federal Reserve is trying to achieve.  Despite a strong selloff on Friday the week did end with the S&P 500 still up 1.5%.  The main event during the second week was the monthly release of the Consumer Price Index (CPI) which, due to the Columbus Day holiday, was not released until Thursday.  Both the Producer Price Index (PPI) and the CPI showed a monthly increase of .4%.  The “core” CPI was still at a 40 year high and that sent the S&P 500 down 2.4% at the open to 3500.  However, at that point a very oversold market found buyers and the S&P 500 rebounded more than 5% to close with a gain of nearly 3%.  We closed out a volatile week with profit taking on Friday that left the S&P 500 down 1.5% for the week.  The third week was the start of quarterly earnings reports, and the early reports were better than expected.  At the end of the week a couple of Federal Reserve Governors wondered out loud if rate increases done thus far would be enough and the market responded with its best week in 4 months.  At the end of the week the S&P 500 had gained an impressive 4.7%.  The last week of the month was dominated by quarterly earnings reports.  Large tech companies were the feature of the week and some of the reports from that sector were disappointing.  Google, Microsoft, Meta, Amazon and others weighed on the overall market with several of those major tech stocks plunging 20% to 30%!

November is the beginning of a 90-day period that has historically accounted for more than 50% of all stock market gains.  Investors tend to be in good moods during the holidays and January sees the largest inflow of money into retirement accounts of any month.  While seasonality is a consideration, it is not absolute. We all remember the market meltdown in Q4 of 2018!  We think interest rates will continue to dictate action, but the midterm election is also going to be a catalyst.  We expect any indication interest rates have peaked to be greeted warmly by the market, while increases beyond what is already expected would be a negative.  The midterm elections will be a market mover and a Republican takeover of the House and/or the Senate should be welcomed, while the status quo will be a disappointment.

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 NEW 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.  You can now listen to previous shows by going to www.iheart.com or using the iHeart app.

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