It was another wild month for US markets, but in a positive way this time.
After a sharply negative September, stocks said ‘hold my pumpkin-spice latte’ as markets charged higher in October. The Dow Jones Industrial Average notched its strongest monthly gain since 1976, posting a 13.94% gain. The S&P 500 and Nasdaq were also positive, adding 7.99% and 3.90% respectively.
With the outsized gains, it was the largest month of relative outperformance for the Dow compared to the Nasdaq since 2002 as value continues to dominate growth this year. The rally was largely driven by speculation that the Fed may start to slow its rate-hike pace sooner if economic data continues to soften.
While US stocks pushed higher, it was more of a mixed bag overseas. Developed international stocks followed the positive trend, but lagged their US counterparts gaining only 6.08%. However, emerging markets ended the month slightly lower, falling 2.85%. Chinese stocks in particular pulled the asset class lower as the country’s “Zero Covid” policy has resulted in numerous lockdowns, disrupting economic activity.
Where stocks were mostly a bright spot, bonds continued to struggle as interest rates ticked higher; the 10-year Treasury yield rose from 3.83% to 4.10%. Persistently rising rates caused the US aggregate bond market to drop 1.30%, marking its third negative month in a row (and 12 of the past 16 months). Down 15.72% so far YTD, aggregate US bonds are on pace to close out only their third negative year since 2000 (bonds lost 2.02% in 2013 and 1.54% in 2021).
While October provided a much needed breather for broad stock markets, future returns still appear to be dependent on the Fed’s decisions regarding rate hikes to tame inflation. If the Fed remains on its current more aggressive path, it’s not unreasonable to expect some further volatility before a more sustained rally. With the ongoing uncertainty in markets, having a plan you can stick with puts you in the best position to weather whatever lies ahead.
An automaker, aerospace corporation, and social media company walk into a bar…
No, this isn’t the start of a bad joke. As of October 27, Elon Musk (who also owns Tesla and SpaceX) has officially become the owner of Twitter.
The journey to get to this point has been complicated to say the least. Musk had initially acquired a large stake in Twitter and eventually signed a deal to buy all of it. He then tried to back out, but Twitter sued him to enforce the contract. Just ahead of the trial, Musk flipped again and said he would buy the company at the original price.
While it’s only been a few days, Musk has already fired multiple executives including former CEO Parag Agrawal.
Looking ahead, layoffs are expected for a large percent of staff in attempt to improve profitability as social media giants have been struggling.
In 1990, Margaret Thatcher resigned as prime minister of the UK after holding the position for 11 years – the longest tenure in modern history.
Fast forward to 2022, and Liz Truss officially resigned just 49 days after taking the spot – making it the shortest tenure ever.
What exactly happened to result in such a quick turnaround? Truss, along with her finance minister, launched a “mini budget” plan that proposed lowering income taxes and increasing in spending.
With inflation already out of control, this upset markets and caused some financial panic as the pound plummeted. Due to the severe reaction, Truss walked back the plan trying to clean up the mess, further diminishing her authority.
The UK is now looking at their fifth prime minister in just six years. Per a British newspaper, turns out a head of lettuce had a longer shelf-life than the remainder of her term after all…
Broad Market Returns
| Asset Class | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | 8.12% | -5.88% | -17.73% | -14.61% |
| NASDAQ (QQQ) | 4.00% | -11.73% | -29.79% | -27.56% |
| Large Cap Growth (VUG) | 4.11% | -11.43% | -30.28% | -28.68% |
| Large Cap Value (VTV) | 11.73% | 0.25% | -4.47% | -0.93% |
| Small Cap Growth (VBK) | 7.04% | -4.92% | -25.64% | -29.02% |
| Small Cap Value (VBR) | 12.00% | -1.89% | -8.98% | -7.40% |
| Developed International (VEA) | 6.08% | -9.95% | -23.10% | -23.50% |
| Emerging Markets (VWO) | -2.85% | -13.05% | -26.61% | -27.64% |
| REITs (VNQ) | 3.51% | -15.24% | -26.84% | -21.43% |
| Aggregate Bonds (BND) | -1.16% | -7.94% | -15.50% | -15.59% |
| Corporate Bonds (VCIT) | -0.41% | -8.70% | -17.29% | -17.31% |
| High Yield Bonds (JNK) | 3.06% | -5.11% | -13.64% | -12.75% |
| Long Term Treasuries (VGLT) | -5.20% | -16.60% | -32.26% | -31.81% |
| International Bonds (BNDX) | 0.54% | -5.89% | -12.42% | -12.16% |
Market Health Indicator
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
Fun Facts
- The Easy-Bake Oven was first released in November 1963. Can it cook a turkey?
- Sweden has more islands than any other country in the world, with over 200,000 (though fewer than 1,000 are inhabited).
- When preparing for hibernation, bears enter a medical state called hyperphagia in which they are constantly eating and can gain up to four pounds… per day!
- The 2022 midterm elections will be held on Tuesday, November 8 – don’t forget to vote!
– The Aspire Wealth Team
Weekly Wake-Up
