Market Update: October Uncertainty Spooks Investors
Financial Insights Clients & Friends,
Stocks tumbled this week on fears surrounding corporate earnings,
global economic growth, rising interest rates, and the continued fallout
of protectionist trade policies. Since October 1, the Nasdaq, S&P 500,
and Dow Jones Industrial indices have fallen 11.6%, 9.1%, and 7.8%,
respectively. Global markets were similarly impacted and continued their
ongoing declines, with developed and emerging markets down 11.0% and 11.2%
respectively for the month (as measured by MSCI’s EAFE and EEM indices).
Technology stocks have led the decline in the U.S. while Chinese equities
continue to weigh on international markets.
Meanwhile, significant geopolitical developments continue to simmer.
Ongoing Brexit negotiations, debates over Italy’s budget, tensions
surrounding Saudi Arabia, and the upcoming U.S. midterm elections continue
to give investors cause for concern.
However, there’s hope yet for investors, explains European Strategist
Chris Bailey. “It is certainly possible [that] the upcoming midterm election
results will induce a more conciliatory tone to world trade discussion,”
Bailey notes, wherein “compromises are found in the Brexit and Italian
budget debates and China continues encouraging its burgeoning consumer
base to boost their spending – a combination that would have a positive
impact on global markets.” He adds, “Important for this may well be a
lower value for the dollar against many of its key global currency peers.”
We believe the long-range outlook for the economy remains positive,
though volatility is to be expected. Periods of calm, such as the months
leading up to October, tend to be followed by turbulent re-adjustments,
explains Raymond James Chief Economist Scott Brown. “We continue to view
this as a normal pullback and not something worse,” adds Senior Portfolio
Analyst Joey Madere. And furthermore, “with earnings and economic growth
being supportive of equities, valuation is now much more attractive.”
In fact, the tumult in the domestic and international stock markets may
be opportunity in disguise. While recent short-term volatility may read as
a cautionary tale to some, we’ve seen periods like this before – and the
subsequent rallies. It’s not always easy to take a long-term view in the
throes of an up-and-down cycle; however, this is precisely why we structure
your financial plan to help you achieve your goals and weather occasional
fluctuations. We truly believe in disciplined financial planning, and that
periodic declines offer a chance to take advantage of opportunities that may
present themselves.
We will closely monitor market movements and share the relevant driving
factors behind them. Expect to hear from us should anything warrant your
immediate attention. Of course, we’re always available to discuss your
concerns and offer perspective when needed. Please do not hesitate to
reach out to set aside some time to talk. Thank you for your continued trust
in us.
Sincerely,
Your Financial Insights Team
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expressions of opinion reflect the judgment of the Research Department of Raymond
James & Associates, Inc., and are subject to change. Past performance is not an
indication of future results and there is no assurance that any of the forecasts
mentioned will occur. The process of rebalancing may result in tax consequences.
Economic and market conditions are subject to change. The Dow Jones Industrial
Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite
Index is an unmanaged index of all common stocks listed on the NASDAQ National
Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The
MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is
generally considered representative of the international stock market. These
international securities involve additional risks such as currency fluctuations,
differing financial accounting standards, and possible political and economic
instability. An investment cannot be made in these indexes.
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differing financial accounting standards, and possible political and economic
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