Selling to a 21 Month Low

September 30, 2022

September has a well-deserved reputation as the worst month for stock market performance.  Not only is it the month with by far the worst average market performance, it is also the only month where the market has historically closed lower more often than it has closed higher.  We had taken a cautious approach coming into the month, but nothing could have prepared us for the pounding the market took during the month.  The month got off to a good start with oil prices plunging to the lowest level since January, but the unrelenting and historic rise in interest rates took away any good news during the month and sent the market to a new 2022 low.  At the end of the month the S&P 500 had lost another 9.3% and is now down 24.8% for the year.   Oil prices dropped 10.6% during the month but are still up 13% this year.  Interest rates were the story with the 10-year Treasury touching 4%, up 21% for the month and 60% above where they were 6 weeks ago.  Gold lost 3% as the dollar surged to a new high.

The month began the Thursday before the long Labor Day weekend with 2 days of quiet trading.  The Labor Day shortened first full week of the month saw oil prices hit the lowest level since January and the market greeted that news with a nice rally.  The European Central Bank raised interest rates by 75 basis points, and it appeared September might not be as bad as feared.  At the end of the first 6 days of trading the S&P 500 was actually higher by 2.8%.  The rally extended into Monday of the following week as some believed, due to plunging oil prices, that the CPI report the following day would have good news.  When the CPI report turned out to be disappointing the S&P 500 plunged 177 points, it 5th worst daily point loss in history and the selling continued to the end of the week sending the S&P 500 down 4.8%.  The following week interest rates hit a 14 year high and the Federal Reserve Open Market Committee raised the Fed Funds rate by the expected 75 basis points.  Fed Chief Powell said they would continue raising rates until they see a steady decline in inflation, and they targeted the year end rate at 4.4%, about 40 basis points above expectations.  The aggressive selling continued with the S&P 500 shedding another 4.6%.  The final week of the month was more of the same with higher interest rates and new 2022 lows for the major indices.  At the end of the week the S&P 500 was down another 2.9%.

October has a bad reputation as it has been the home of 3 of the market’s worst crashes.  However, the month historically ends with a gain and has closed higher nearly 60% of the time.  Interest rates are calling the shots right now and if rates continue to rise during the month stocks are likely to react negatively.  However, the market has reached extreme oversold conditions with many of the sentiment readings at or near historic highs.  Sentiment is a contrary indicator as negative respondents are seen as people who have sold and are now potential buyers.  Traditionally the first half of the month is an extension of September, but the later part of October is typically a stronger period for stocks as we approach the November through January period which has accounted for 60% of all market gains.  We have been defensive since mid-August and will look to be less defensive as we get into October.

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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