Hope you are all doing well. A strong start to the week lifted the S&P 500 and the NASDAQ to record highs on Tuesday. Neither index was able to push its record higher as the week progressed, but both finished around 1% higher overall, as did the Dow. The bull market which started October 2022 crossed the four years mark. AI has dominated this bull run with a handful of mega-cap companies driving an outsized share of returns and market value. Legendary coach Mike Ditka passed away this weekend I have broken down this week’s update using quotes from the coach.
I want to live to be 150 and they say why would you want to do that. I say, well there’s a few people I haven’t made mad yet, I want to get them.
A rising rate environment usually upsets the stock market. It has it done that yet. The S&P 500 has thrived despite the highest interest rate environment in more than two decades. Treasury yields have climbed to new cycle highs. Yields on the 10-year and 30-year U.S. Treasuries were slightly lower overall for the week but remained near their highest levels. At Friday’s close, the 10-year yield was 5.24%; the 30-year was 5.60%. In this interest rate environment bonds should continue to be avoided. Consider using fixed annuities as alternative to bonds to take advantage of the higher rates without any volatility to your principal.
Success isn’t permanent and failure isn’t fatal.
For global energy markets and shipping firms like Maersk the repeated tanker attacks, closed secondary pathways, and spiking fuel surcharges feel like rolling catastrophes. Yet, the global economic and maritime system hasn’t suffered a permanent death blow. Strategic petroleum reserves, emergency re-routings, and the refusal of commercial shipping to permanently abandon the Strait of Hormuz has kept trade limping forward. This resilience is why we are seeing volatility in the oil market subside. Oil traded in a relatively narrow range for the second week in a row. When Middle East tensions escalated in March and April oil went up to $115 per barrel. On Friday afternoon, U.S. crude was trading around $91.50 per barrel.
If you were 2-7, you’d be in a bad mood, too!
Consumers have been in a bad mood for the past 7 months. The conflict in the Middle East has caused considerable hand wringing about persistent inflation. The monthly gauge of U.S. consumer sentiment fell to its lowest level in five months. Consumer Sentiment fell to a preliminary October reading of 46.3, down from a final September reading of 48.1 and 51.7 in August. If sentiment turns around that could signal the next leg higher of this bull market run.
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