After declining for the third consecutive month in October, stocks rallied sharply last week as economic data, Fed commentary, and a reduction in Treasury note issuance led to a decline in interest rates. In fact, the S&P 500 and Nasdaq 100 each had their best weekly gains (up more than 5% and 6%, respectively) since the week of 11/11/22.
The S&P 500 gained more than 20% through the end of July but then experienced a decline of 8.3% over the three months leading up to November. The main driver of this equity market sell-off has been the sharp rise in interest rates, with the 10-year U.S. Treasury yield climbing 1.25% from mid-July through mid-October and rising above 5% for the first time since 2007. The continued increase in Treasury yields weighed on both stocks and bonds as valuations adjusted to a world of higher interest rates. Small-cap stocks underperformed large-cap stocks by over 4.5% in October, and defensive sectors outperformed cyclical sectors. In the credit market, bonds posted another month of negative returns.
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Important Disclosures: The report herein is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The information contained herein is based on technical and/or fundamental market analysis and may be based on data obtained from recognizable statistical services, issuer reports or communications or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Index returns are not fund returns. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Yields are given as of 10/1/2023.Bonds are subject to price and availability.
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