Monthly Observations from CIO, Chris Zaccarell
Markets in Review
Stock markets fell for the third month in a row, with the S&P 500 dropping -2.2% on the month, which reduced its year-to-date gains to 9.2%. The MSCI All Country World index also fell, losing -3.1% in October, which leaves its year-to-date return at 5.2%. Bonds also dropped with the Bloomberg BarCap U.S. Aggregate Bond index down -2.6% for the month, reducing its year-to-date return to a -2.8% loss.
The stock market has been affected by rising interest rates, dysfunction in Washington, and now a second war in the Middle East (in addition to the war in Ukraine), but the economy continues to produce at a high level and unemployment has remained low, despite the fact that inflation is too high.
- Hamas terrorists invaded Israel in a surprise attack
- House Speaker Kevin McCarthy was removed
- Earnings and economic data have been mixed
News in Review
Below are some stories that caught our eye this past month. To learn more, follow the links to the full article.
On October 7th, Hamas militants invaded Israel and slaughtered 1400 men, women, and children in a brazen attack, almost 50 years to the day of the Yom Kippur War. The indiscriminate killing of civilians enraged Israel citizens and their government, and now a war is being waged between the two sides, with innocent Palestinian and Israeli civilians caught in the crossfire. The United States has tried to intervene to coordinate the safe passage of humanitarian assistance to Palestine, but it has also increased its military forces in the region to try to deter Iran – which sponsors the Hamas terrorist group in Palestine and the Hezbollah terrorist organization in Syria – so that the conflict doesn’t widen.
Republican House Speaker Kevin McCarthy was removed from his position when 8 Republicans joined with 208 Democrats to vote him out. Although, 210 Republicans voted for him, it wasn’t enough for him to stay in power. He is now succeeded by Mike Johnson, a Republican from Louisiana and it remains to be seen how he will hold the House together as they have a very narrow majority and increasingly disparate ideas about how to govern.
United States Gross Domestic Product (GDP) grew faster than expected as consumer spending remained resilient and the labor market continued to defy expectations, but disappointing results from tech companies overshadowed the positive economic news, driving stock prices and bond yields lower.
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S&P 500 INDEX: The Standard & Poor's 500 Index is an unmanaged, capitalization-weighted index of 500 stocks designed to measure the performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
NASDAQ 100 INDEX: The Nasdaq 100 Index is an unmanaged, capitalization-weighted index of the largest 100 non-financial stocks traded on the Nasdaq market. Unlike the S&P 500 it does not represent all major industries and may be more volatile than more broadly constructed indices.
MSCI ACWI INDEX: The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries. With 2,495 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index: The Bloomberg U.S. Aggregate Bond Index is a broad-based index of the U.S. investment-grade, fixed-rate bond market, including both government-related and corporate securities and mortgage-backed and asset-backed securities.
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