Weekly Market Update October 4, 2023
Congress struck a deal on Saturday to avoid a government shutdown that would have gone into effect as the clock struck midnight, securing funding through mid-November. Concessions were made on both sides as House speaker Kevin McCarthy ultimately broke with his conservative wing to move forward without strict new border policies in the legislation, while democrats sacrificed $6 billion in aid for Kyiv. Republicans insist any new funding for Ukraine, which Democrats vow to pursue in a supplemental bill in the coming weeks, must be tied to new border policies and funding. (Source: The Wall Street Journal)
The S&P 500 Index fell 5% in September, the second straight month of losses for the index comprised of U.S. large-cap companies. The index is now down 7% from its peak while holding onto a 12.7% year-to-date return. The investment landscape for bonds has also turned negative in the face of rising interest rates, causing many investors to recalibrate asset allocation decisions and valuations for a “higher for longer” interest rate environment. (Source: The Wall Street Journal)
This week's data will spotlight the U.S. employment landscape with the ADP Employment Change report on Wednesday preceding the September Monthly Employment Situation report on Friday, which includes the highly watched unemployment rate figures. ISM Manufacturing and ISM Services Index for September are also reported this week.
Blueprint Numbers
YIELDS CONTINUE HIGHER - apart from 2-year Treasuries, yields pushed higher last week. The 10-year Treasury eclipsed 4.5% for the first time since October 2007. The 30-year Treasury yield broke through 4.7%, the highest level since February 2011. Subsequently, mortgage rates have climbed to their highest level in 23 years. (Source: John Hancock)
UN-MAGNIFICENT SEVEN - Tech stocks love their monikers. The formerly dubbed "FAANG" stocks (Facebook, Apple, Amazon, Netflix, Google) has transitioned to the "Magnificent Seven", removing Netflix and adding Microsoft, Nvidia, and Tesla. The group was responsible for nearly all of the stock market's return through the middle of 2023, but have since given back some gains; shares of Nvidia fell 12% in September, Apple slid 9%, and Amazon dropped 8%. (Source: The Wall Street Journal)
BOND MARKET BLUES - Bonds have been in bear market since August 2020, a 38-month bear market which experienced a max drawdown of -17.2%. This is the worst performing bond market in both magnitude and longevity in U.S. history, with the previous longest bear market lasting 16 months (1980-1981) and the largest previous drawdown of -12.7% (1979-1980). (Source: The Compound)
RYDER CUP TREND CONTINUES - The European team defeated the U.S. in Italy over the weekend, marking the seventh straight Ryder Cup loss by the Americans played outside of the U.S. The U.S. has now lost eight of the last 11 Ryder Cups and have not won overseas since 1993. (Source: ESPN).
The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Stock investing includes risks, including fluctuating prices and loss of principal.
