Hope you are all doing well. An otherwise quiet week of trading turned volatile on Thursday with stocks tumbling amid fresh concerns about the growth potential of technology stocks and artificial intelligence. Although the major indexes regained positive momentum on Friday, the S&P 500 and the NASDAQ ended with weekly declines of more than 1%. The Dow’s decline was fractional. Overall for the month the S&P 500 slipped 1.0% in October to break a string of five consecutive monthly gains; over the past 12 months. It was only just the second negative result versus 10 gains. The NASDAQ and the Dow were also negative in October. Teri Garr passed away this week, I have broken down this week’s update using quotes from her character, Inga in Young Frankenstein.
Put… ze candle… *beck*!
Like the spinning bookcase in the movie, the Federal reserve has found the passageway to a soft landing. The U.S. economy largely maintained momentum in the third quarter despite recently high interest rates and continuing concerns about inflation. While the latest quarter’s annual GDP growth figure of 2.8% was slightly below the second quarter’s 3.0% reading, it was well above the 1.6% first-quarter rate. The positive economic numbers come as inflation continues to trend down to the Fed’s two percent target. The Fed’s preferred inflation gauge showed slow but steady easing of price pressures. The Personal Consumption Expenditures (PCE) Index rose at an annual rate of 2.1% in September, down from 2.3% in August and the lowest figure since February 2021. Excluding energy and food prices, the core PCE Index rose 2.7% in September.
In other vords: his veins, his feet, his hands, his organs vould all have to be increased in size….He vould have an enormous schwanzstucker.
The largest companies keep getting larger. The biggest tech companies reported monster earnings this week. Add to that the Friday afternoon announcement that Nvidia will now be a Dow Jones component and large cap tech looks poised to continue growing. Last week was the busiest stretch for earnings season with Amazon, Meta and Apple all reporting earnings. As of Friday, analysts were forecasting that third-quarter earnings for all companies in the S&P 500 would rise by an average of 5.1%, based on results already reported and forecasts for earnings numbers that are still pending.
Oh, sweet mystery of life, at last I’ve found you!
At last the U.S. presidential election is finally here. We will hopefully find out Tuesday who the 47th President will be. We may not know the results of the election immediately, it could take days before the counting is finalized. Be aware the election may create temporary uncertainty. Don’t panic, market volatility is likely the short run. Markets longer term are guided by the fundamentals. Driven by things that are crucial to the growth of the economy like corporate earnings growth and the labor market. To my point, full year earnings growth is expected to be about 9%. That is well above last year’s 1% growth rate. The jobs report for October came in below expectations, but those figures were skewed by last month’s hurricanes and labor strikes. The labor market is slowing but still strong by historical standards. I continue to believe we are in the early stages of this bull market and any dips in the market should be viewed as a buying opportunity.
If you’d like to speak about your investments or your plan, my calendar link is below and you can schedule a phone or zoom appointment.
