It was another great week and month as the stock market rolls in to the fourth quarter! However, October has secured a place in history as the fourth worst month for the Dow Jones industrial average and the S&P 500 Index, two of the stock market’s major averages. The worst October ever was in 1987, when the stock market declined more than 23 percent.
So what does this mean? Not much probably. October is traditionally one of the most volatile months for the stock market while we have gone over 19 months without much volatility. Here’s a quick question for you: why are you taking the level of investment risk you are? If you are choosing high risk and your answer has anything to do with a financial objective in the next five years, then we should talk. A good or bad October should not influence your level of investment risk. Aligning your risk and strategies with your objectives is what we do at PCA.
Personal Spending Barely Improves
Consumer spending increased by only a seasonally adjusted 0.1% in August, while consumer incomes rose 0.2%. Those gains precisely matched the projections of economists surveyed by the Wall Street Journal. Factoring in inflation, household spending actually retreated 0.1% during August. Hurricane Harvey may be partly to blame for these numbers.1
Rounding Up Real Estate Indicators
Census Bureau data shows new home buying down 3.4% in August; this dip comes on the heels of a (revised) 5.5% fall in July. Pending home sales, as measured by a National Association of Realtors index, slipped 2.6% in August after retreating 0.8% a month earlier. The 12-month gain for the S&P/Case-Shiller home price index improved 0.2% to 5.8% in the July edition (released last week).2
Consumer Outlook Weathers Storms
The University of Michigan’s consumer sentiment index and the Conference Board’s consumer confidence index both declined for September, but not drastically. The university’s gauge fell 1.7 points to a reading of 95.1, right where analysts polled by MarketWatch thought it would land; that left it 4.3 points above where it was in September 2016. At a mark of 119.8, the CB index was just 0.6 points lower than its August reading.2,3
Wall Street Wraps Up a Good Week & Month
The three major indices all advanced last week. Taking the lead, the Nasdaq Composite posted a 5-day gain of 1.07% on the way to a Friday close of 6,495.96. In the same period, the Dow Jones Industrial Average improved 0.25% to 22,405.09; the S&P 500, 0.68% to 2,519.36. At the close on September 29, the Nasdaq had added 0.94% month-over-month; the Dow, 1.90%; the S&P, 1.73%; the Russell 2000, an impressive 5.47%. The CBOE VIX ended the month at just 9.51.4
Monday sees the release of ISM’s September manufacturing PMI. Tuesday, Lennar and Paychex announce quarterly earnings. ISM’s September service sector PMI and ADP’s latest payrolls snapshot arrive Wednesday, plus Q3 earnings from Monsanto and PepsiCo; in addition, Federal Reserve chair Janet Yellen will speak briefly at the St. Louis Fed’s community banking conference. Thursday offers new initial claims numbers, the September Challenger job-cut report, and Q3 results from Constellation Brands and Costco. On Friday, the Department of Labor issues its September jobs report.
|% CHANGE||YTD||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||9/29 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.49%||0.02%||-0.77%||2.27%|
Sources: wsj.com, bigcharts.com, treasury.gov – 9/29/174,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS
real yield = projected return at maturity given expected inflation.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
- 1 – foxbusiness.com/features/2017/09/29/u-s-consumer-spending-soft-in-august.html [9/29/17]
- 2 – investing.com/economic-calendar/ [9/29/17]
- 3 – marketwatch.com/story/consumer-sentiment-eases-but-stays-strong-in-the-face-of-hurricanes-and-politics-2017-09-29 [9/29/17]
- 4 – markets.wsj.com/us [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F29%2F16&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F29%2F16&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F29%2F16&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F28%2F12&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F28%2F12&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F28%2F12&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F28%2F07&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F28%2F07&x=0&y=0 [9/29/17]
- 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F28%2F07&x=0&y=0 [9/29/17]
- 6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/29/17]
- 7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/29/17]