Market Month: October 2018
The Markets (as of market close October 31, 2018)
October truly was a scary month as stocks closed the month well below their end-of-September values.
The tech-heavy Nasdaq lost over 9.0% by the end of October, while the small caps of the Russell 2000
fared even worse, losing almost 11.0%. The S&P 500 fell close to 7.0% — its largest monthly decline in over
seven years. The Dow dropped 5.0%, and the Global Dow sank over 7.0%. A slide in internet stocks, coupled
with investor concerns that global economic growth is slowing, helped amp up volatility during October.
Yields on long-term bonds rose as prices fell, with the yield on 10-year Treasuries climbing about 8 basis
points on the last day of the month.
Last Month’s Economic News
- Employment: Total employment rose by 134,000 in September after adding 270,000
(revised) new jobs in August. The number of unemployed persons fell to 6.0 million. - FOMC/interest rates: The Federal Open Market Committee did not meet in October.
The next meeting is scheduled for November 7-8. - GDP/budget: The initial, or advance, estimate of the third-quarter gross domestic
product showed the economy expanded at an annualized rate of 3.5%, according to the
Bureau of Economic Analysis. The second-quarter GDP grew at an annualized rate of 4.2%.
According to the report, consumer spending surged, increasing at a rate of 4.0% (3.8% in the
second quarter). Nevertheless, the government deficit ended the fiscal year at roughly $779
billion — an increase of almost $113 billion, or 17%, over fiscal year 2017. - Inflation/consumer spending: Inflationary pressures continue to creep
along, while consumer spending continues to be strong.- The Consumer Price Index rose 0.1% in September after increasing 0.2% in August. Over the
last 12 months ended in September, consumer prices are up 2.3%. - According to the Producer Price Index, the prices companies receive for goods and services
actually jumped 0.2% in September, the same increase as in August (revised). Producer prices have
increased 2.6% over the 12 months ended in September.
- The Consumer Price Index rose 0.1% in September after increasing 0.2% in August. Over the
- Housing: New home sales fell 5.5% in September and are down 13.2% from the
September 2017 estimate. The median sales price of new houses sold in September was $320,000. The
September average sales price was $377,200 ($388,400 in August). - Manufacturing: Industrial production advanced 0.3% in September, its fourth
consecutive monthly increase. For the year, industrial production has advanced 5.1%. Manufacturing
output increased 0.2% following a 0.2% increase in August. - International markets: Major investor sell-offs in October have cost global
stock and bond markets about $5 trillion in value. The Chinese yuan fell to its weakest price since
May 2008, hit by an economic tailspin that’s been exacerbated by U.S. tariffs. The United Kingdom
announced that it would be the first industrialized nation to tax digital services, with other
countries soon to follow. Angela Merkel announced that she will step down as German chancellor when
her mandate ends in 2021. - Consumer confidence: Consumer confidence, as measured by The Conference Board
Consumer Confidence Index®, rose in October, following a modest improvement in September. Consumer
confidence increased in current business and labor market conditions. Consumers also looked favorably
on short-term income, business, and labor market conditions. - Eye on the Month Ahead
Investors will be looking for stocks to rebound in November following a treacherous October.
November’s midterm elections likely will play a big role in the stock market in particular, and
in the economy in general.
U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City
Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance:
Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S.
Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK);
www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based
on reports from multiple commonly available international news sources (i.e. wire services) and are
independently verified when necessary with secondary sources such as government agencies, corporate
press releases, or trade organizations. All information is based on sources deemed reliable, but no
warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion
expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be
relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk,
including the potential loss of principal, and there can be no guarantee that any investing strategy will be
successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded
blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common
stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index
is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell
2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow
is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar
Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies.
Market indices listed are unmanaged and are not available for direct investment.
This information was developed by Broadridge, an independent third party. It is general in nature, is not a
complete statement of all information necessary for making an investment decision, and is not a
recommendation or a solicitation to buy or sell any security. Investments and strategies mentioned may not
be suitable for all investors. Past performance may not be indicative of future results.