September was another negative month as inflation, and the ongoing attempts to counter it, rattled markets.
Due to the persistence of inflation, the Fed indicated that it would need to raise interest rates higher and for longer than originally expected. This announcement had a negative impact on the stock market, including the S&P 500 hitting levels not seen since 2020 as it fell 9.34%. The Dow Jones Industrial Average and Nasdaq followed suit dropping 8.83% and 10.50% respectively. All three major indices closed the month in bear market territory (down 20% or more from their all-time-high levels).
Overseas, Russia made the decision to cut off the flow of natural gas exports via the Nord Stream 1 pipeline, which has historically supplied European Union states with 35% of all the gas they import from Russia. This move, plus an overall low consumer sentiment, pushed global markets further into the downturn as well. Developed markets saw a decline of 9.86%, while emerging markets took a larger hit with a loss of 10.08%.
On the fixed-income side, the yield curve remains inverted with many shorter duration bonds offering a higher yield than longer-duration bonds (which reflects investors becoming more pessimistic about economic prospects for the near future). With the Fed hiking rates by 0.75% for the third consecutive meeting, interest rates rose across the board with the 10-year Treasury yield jumping from 3.15% to 3.83%. As a result, the aggregate US bond market took a loss of 4.34%, which was its worst month of the year.
The story of 2022 so far has been volatility and disappointment, with most asset classes down overall year to date. Thankfully, bear markets historically have come and gone with markets trending higher over time, and there is no reason to think differently this time around. It isn’t always easy when enduring the worst of it, but over the long-term investors can find comfort in staying the course with their plan and trusting that they will benefit when stock prices eventually begin to rise again.
Last month, Tesla teased a more advanced version of their humanoid robot, Optimus, at their “AI Day” event. It walked out onto the stage, waved to the crowd, and did a little dance to demonstrate some of its capabilities.
While many offered negative feedback given the fact other robots have been seen doing a lot more, Elon Musk said there was additional functionality that they didn’t yet display.
What is the motive behind building it though? In theory, the robot was designed to perform repetitive or mundane tasks that humans no longer want to do. Furthermore, if people aren’t looking to fill certain jobs, robots could take their place.
For better or worse, it isn’t expected for this to happen anytime soon. Fully functional AI robots seem to be a number of years off still.
However, it appears science fiction is that much closer to science reality.
On a more positive note: Trader Joe’s is bringing back free samples. When the pandemic started the company had to put them on pause for health and safety reasons, but now will have various treats and snacks available again.
Be careful though as free samples do serve a purpose, which is to get customers to spend more money.
Stopping for samples tends to keep people lingering around the store for longer and fires up their appetite, leading to some potentially unplanned purchases.
Overflowing carts mean bigger grocery bills, and that is not always good for the budget. When it comes to in-store freebies, discipline is key.
Nevertheless, free samples can often be used by small or local brands to increase awareness, so at least those extra dollars being spent could help support the little guys!
Broad Market Returns
| Asset Class | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | -9.20% | -4.94% | -23.90% | -15.46% |
| NASDAQ (QQQ) | -10.54% | -4.47% | -32.49% | -24.87% |
| Large Cap Growth (VUG) | -10.44% | -3.83% | -33.03% | -25.83% |
| Large Cap Value (VTV) | -7.81% | -5.74% | -14.50% | -6.51% |
| Small Cap Growth (VBK) | -9.00% | -0.77% | -30.53% | -30.04% |
| Small Cap Value (VBR) | -9.93% | -3.79% | -18.74% | -13.56% |
| Developed International (VEA) | -9.86% | -10.61% | -27.51% | -25.55% |
| Emerging Markets (VWO) | -10.08% | -11.20% | -24.45% | -24.55% |
| REITs (VNQ) | -12.87% | -11.05% | -29.32% | -18.68% |
| Aggregate Bonds (BND) | -4.18% | -4.64% | -14.51% | -14.55% |
| Corporate Bonds (VCIT) | -4.71% | -4.73% | -16.95% | -17.27% |
| High Yield Bonds (JNK) | -3.87% | -1.69% | -16.20% | -15.61% |
| Long Term Treasuries (VGLT) | -7.91% | -9.72% | -28.54% | -26.70% |
| International Bonds (BNDX) | -2.89% | -3.38% | -12.90% | -13.02% |
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
- October gets a bad rap in markets because so many terrible days have fallen in this month. However, October is historically in the middle of all monthly returns on average.
- The International Space Station is closer to Earth than San Francisco is to LA (254 miles vs 347 miles).
- Contrary to popular belief, pumpkins are actually a fruit, not a vegetable. In fact, all winter squash is considered fruit!
- If markets have you feeling down, there is good news for you… October 15 is National Grouch Day.
– The Aspire Wealth Team
Weekly Wake-Up
