Financial Market Overview
October has a bad reputation for monumental crashes such as those in 1928, 1987 and 2008, but historical data indicate a push to new highs through the end of the year is likely. October for the S&P 500, for the last 20 years, is actually the strongest month of the year. The S&P 500 has risen by an average 2.1% in October over the past 20 years. (source: LPL Financial) Additionally, going back to 1950, October is the strongest month during midterm election years. Since 1982, October in midterm years has only been down once.
US equities continue to outperform International and likely will continue to do so. In fixed income, interest rates rose across all time frames (short, medium and long) due to the Federal Reserve continuing to increase short-term rates and the strength of the US economy. This has put downward pressure on fixed income security values. We continue to favor equities over fixed income.
The third reading for second quarter GDP growth reaffirmed what I have been saying – the US economy is growing solidly. Growth in the second quarter was 4.2%, up from 2.2% in Q1, and estimates are for it to remain north of 4% going into Q4. Unemployment remains historically low, inflation is tame, the housing market remains robust and the fiscal stimulus released by the tax reform act in 2017 is still feeding its way into the economy.
While the US economy is quite strong right now, I am anticipating a slow-down in growth (not a recession) in mid-to-late 2019, as the combined effects of the fiscal stimulus wearing off while the Federal Reserve is raising interest rates to act as brakes.
Overall, we have a positive outlook for the economy and financial market for the balance of 2018 and well into 2019. We continue to invest accordingly while monitoring for any change to our outlook.
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October Calendar of Events (comments and additions for future months are always welcome)
- October is Breast Cancer Awareness and Domestic Violence Awareness month.
October 7th 2nd anniversary of purchasing our office building – we’d love to have you come for a visit – 141 W Main Street Rockaway
October 8th Columbus Day
October 15th Medicare open enrollment thru 12/7/18 – you can switch from original Medicare to Medicare Advantage, or vice versa. You can also switch from one Medicare Advantage plan to another, or from one Medicare Part D (prescription drug) plan to another, or drop your Medicare Part D coverage altogether. Please call us if you have any questions about your options.
October 22nd National Nut Day – only in America can you have a day to celebrate nuts. Ps: peanuts are legumes, not nuts!
October 31st Halloween
Sources: CNBC.com, LPL Financial, Nottingham Advisors
Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
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