After the drawdown we saw in September, the markets regained some positive momentum as we closed out October. We saw broad rallies in the three main US equity indexes with the Dow Jones leading the pack. The Nasdaq trailed both the Dow Jones and the S&P 500 due to its weight in the technology sector. Bond yields continued to rise to start the month but have been relatively flat for the end of the month.
Earnings have been front and center for market participants as companies reported on their quarterly results and future outlooks. Many companies have been able to report better than expected earnings, leading to strong stock performances following the release for some. Others, however, have not been so fortunate as the market seems to be truly punishing bad performance. One key takeaway from the overwhelming majority of earnings calls is the resetting of future expectations. Companies have been reducing their forward guidance as they continue to navigate the unfolding macro environment.
On the economic front, the third quarter’s US GDP advance estimate was released showing growth of 2.6% on a year over year basis. Good news for all, as this early estimate shows the economy can expand after inflation given all the negative headlines and datapoints. However, many market commentators are still cautious, claiming the lasting effects from interest rate hikes are still to come.
The Federal Reserve is scheduled to meet at the start of November to discuss and announce, what is anticipated to be, another interest rate increase of .75%. The comments accompanying any announcement will be vital to the market. What the Fed reveals on their plan for interest rates will have a major impact to the stock and bond markets.
